Strategies for Building Impactful Partnerships with Financial Institutions: Insights from NAventures
As fintech startups and companies in Atlantic Canada look to scale and make a significant impact in the financial services sector, partnering with established financial institutions can be a game-changing strategy. James Povitz, Principal at NAventures, National Bank of Canada's corporate venture capital arm, offers valuable insights into how fintechs can successfully build partnerships with large regulated businesses like banks and insurance companies. Here are key takeaways for Atlantic Canadian fintech entrepreneurs:
Understanding Partnership Archetypes
When approaching prospective partners, it's crucial to understand how your company fits into common partnership models:
Distribution Channel: Your platform distributes the partner’s products.
Acquisition Channel: You channel your customers to the partner.
Tuck-in Model: Your product is embedded into the partner’s offering.
Operational Improvement: Your solution enhances the partner’s internal operations.
Identifying which model best suits your fintech can help you tailor your pitch and find the right stakeholders within the institution.
Navigating the Organizational Structure
Large financial institutions can be complex, with thousands of employees. To maximize your chances of success:
Start your outreach in the right department based on your offering. Understanding the institution’s structure, and how your solution fits in, is paramount.
Focus on the right champions within the structure who understand and can benefit from your product or service.
Identify and align with these four key groups:
Executive Sponsor – most likely the final decision maker.
Business Line Sponsor – most likely to have authority and P&L accountability.
Tactical Sponsor(s) – individuals responsible for implementation and day-to-day (IT, compliance, cybersecurity, risk, etc.).
Innovation/Venture Teams – individuals who can help you navigate organizations and priorities.
Remember that the organizations operate with interdependent internal partners, including compliance, cybersecurity, and legal departments. Consider these dependencies early in your process.
Establishing Credibility and Building Trust
To instill confidence in your potential partners:
Keep your business champions and their needs top of mind, connecting your solution to their business priorities – this should be your North Star. Use public disclosure (press releases, annual reports, conferences, etc.) to guide you in your research.
Articulate your value proposition clearly for each stakeholder's reality and quantify the benefits your partnership will deliver. Provide crisp documentation that demonstrates value and can be easily shared within the organization.
Foster participative investment by working collaboratively with stakeholders on a mutually beneficial business case that explicitly defines success.
Address risk and compliance early in the discussions and demonstrate how your solution meets regulatory and operational standards.
Build relationships of trust by understanding and fillings gaps in your counterparts’ knowledge or capabilities.
Do not overpromise, be transparent about your solution’s capabilities and what is needed from the partner to be successful.
The Role of Corporate Venture Capital
NAventures' approach demonstrates how corporate venture capital teams can help drive meaningful partnerships:
They can provide direct equity capital
They help surface organizational needs and priorities
They help identify the right internal champions and stakeholders
They help build mutually beneficial business cases
They help navigate the procurement process
They help partners expand throughout the organization
Conclusion
Building impactful partnerships with financial institutions requires strategic thinking, thorough preparation, and a deep understanding of organizational structure and needs. By following these insights, fintech startups can position themselves for successful collaborations that drive growth and innovation in the financial services sector. Remember, the key to success lies in aligning your innovative solutions with the partner's objectives. With persistence and the right approach, your fintech could be the next success story.
Want to dive a little deeper? Register and watch the recorded session with James Povitz from NAventures here: https://us02web.zoom.us/rec/share/5rNmmMT3qcO4yJRS2fz4KDcB7HCvPdwLNvYxXMRzAftN6NlSCTnFIcUmBYbep8PL.pRkIQS1a-TO8ZCT8