Innovation may be great but it leads to challenges – for #newFS how to get it out there (I think the “how to do it” is going well right now”). For #oldFS the challenge is “how to absorb it”.
This bridging is being done by both new and established firms. In LFP002 Warren Bond of matchi.biz (a smallco/fintech) discussed their dating/database approach to bridge. In this episode Samad Masood who previously ran Accenture’s Fintech Innovation Lab and is now Open Innovation Lead at Accenture shares his experience of how a big, established player sees this challenge.
Samad has a deep background in this area having been involved in reporting on the startups just as the dot-com bubble was hitting its peak. One of the key takeaways from that experience for him was that “the best technologies aren’t always the best businesses” – a lesson which needs to be borne in mind in the current boom. A further lesson was that innovation has a great impact than people expect but it also takes longer than they expect.
The fintech stone has been lobbed into a very large pool and the ripples have spread far. Accenture is a multinational management consulting, technology services and outsourcing company. Measured by revenues, the world’s largest consulting firm and has over 300,000 staff.
Notwithstanding this “large oil tanker” scale it has proved remarkably nimble and agile in orientating itself to the new world (and perhaps see their Ad above). Its reports on Fintech investment patterns are the most widely quoted of all. It was perhaps the first to set up a fintech accelerator program (in New York in 2012) which is now in NY, London, HK and now Dublin.
In terms of bridge building Samad describes his threefold topology of Fintechs:
i) Disruptive Fintech – businesses that want to sell FS in a new way, generally B2C, (eg Zopa, Ratesetter, Transferwise, Crowdcube, Nutmeg);
ii) FS Technology companies that are selling FS technology to any business – “backroom technologies, generally B2B” (eg Currency Cloud);
iii) Enterprise Technology companies – sell technology to any business but as FS so large they tend to have plenty of FS clients – big data, accounting, etc (obvious examples given state of maturity of fintech are still large cos – Oracle, Salesforce)
In terms of their relationship with the incumbent player – how they will relate – he talks through another threefold model about which part of a dinosaur/Brontosaurus (ha!) the new fintech is approaching.
i) type one above are nibbling away at the long tail of the dinosaur (and at first its small, far away from the core) … over time they will nibble more of the tail and get noticed as a competitor more;
ii) type ii & iii are “tickling the tummy” – helping the FS incumbent become better and want to engage;
iii) other ones going more for the dinosaurs head – eating its food – going direct for its competitors (eg Simple, Nutmeg). So eg BBVA bought Simple which is a real reaction to a competitive threat/opportunity.
Based on these models Samad discusses his experience of how this has all been changing over time, what each side of #newFS and #oldFS has to offer the other and where the whole scene is heading towards. Samad also explains what Open Innovation is and how it operates at Accenture and what his function can offer to both startups and established players.