David and Goliath Walk Into a Bar . . .

A few years ago, financial services used the classic metaphor of David and Goliath to illustrate the industry’s growing disruption: fintech, painted as the agile underdog, versus the formidable and experienced incumbent. 

But over the past five years, the David and Goliath metaphor in reference to fintech innovation has become increasingly inaccurate. Sure, incumbents are huge and powerful, but fintech companies are becoming more sophisticated and global in reach. And most importantly, talk in the industry has shifted from focusing on contention to championing collaboration. 

So now that many of the Davids and Goliaths of financial services are trying to work together (or at least refraining from violent slingshot encounters), how do we account for the challenges this type of collaboration presents? 

From addressing culture to communication, MassChallenge FinTech (MCFT) facilitates these relationships daily in matching our cohort of fintech start-ups with major enterprises such as Fidelity Investments and Citizens Bank. 

Here’s what some of our 2019 cohort start-ups had to say:

#1 Communication, Communication, Communication

Effective communication is often an oversimplified aspect of successful enterprise-start-up collaboration. Luckily, miscommunication is avoidable, and identifying champions and technical leads as main points of contact in the enterprise can help keep everyone on the same page and push partnerships forward.

“These partnerships are like a marriage, and you truly want to be open in communication and proactive when feedback [is given] or decisions are made. This also showcases that as a start-up you're making time for your partner even when the environment around you is in strategic chaos with development, sales, marketing, and product management going on.”
—Justin Witz, Co-Founder and CEO, Catapult HQ

“For the most part, I think enterprises working with young fintech companies can expect a dedicated partner that will work tirelessly to achieve their common goal, whatever that may be. The path to innovation isn’t perfect, but resilient companies — the ones that are going to ‘make it’ — will learn from every experience and get stronger every day. By keeping an open mind and an open line of communication, and assigning someone to lead the project that embodies those attributes, enterprises will set themselves up for success.”
—Zac Sheffer, Founder and CEO, Elsen

“The key is to view each other as partners with a foundation built on trust. Additionally, communication, expectation setting, patience, and agility.”
—Greg Woolf, Founder and CEO, Coalesce.ai

#2 Think Time Spent and Timeline

We all know time is the entrepreneur’s scarcest resource. We also know start-ups move much faster than large enterprises. But this shouldn’t lead to expectations of immediate results or instant gratification — both sides should think long term. Additionally, incumbents must be realistic about the time they can commit to each partnership and be ready to respond to an accelerated timeline.

“Focus on building long-term value together. Too often I hear start-up companies that lack experience expecting short-term results, and they are impatient with the process. Financial service companies have a higher level of compliance and risk tolerance than other industries, and are subject to governance and regulatory requirements. A deep understanding of timelines driven by staged diligence and compliance is key to successfully pursue a fintech-enterprise partnership.”
—Chris Wong, Co-Founder and CEO, Lifesite

#3 Define Success (And Measure It)

What are your key performance indicators and metrics for your partnership? Your priorities? 

Setting clear expectations starts with viewing fintech start-ups as more than vendors, and viewing enterprises as the industry experts they are. Overcome egos, be transparent about your strengths and weaknesses, and align on clear benchmarks. Get creative, think quantitatively and qualitatively – these relationships can lead to new avenues for success if you approach them as true partnerships.

“From our experience, the best way to have a successful fintech-enterprise partnership is to have clear communication of goals and a mutual understanding of what success looks like. The enterprise tends to be more risk averse, so it is helpful if they can see that regardless of the outcome of a pilot, it is an effective way to achieve very fast cycles of learning and jumpstart entrepreneurial thinking within their own organization.”
—Suelin Chen, Co-Founder and CEO, Cake

“Large enterprises are more prepared than ever to work with start-up companies, thanks in part to programs like MCFT. There will still be hiccups given the speed mismatch between start-ups and large organizations, but when banks and fintechs come together with the end user in mind, these hiccups can be overcome.”
—Alain Glanzman, Co-Founder and CEO, WalletFi

“Fintech entrepreneurs need to approach large enterprises, or companies of any size, like a true partnership. Keep a broad focus — win, win, win — for our team, their team, and most importantly, your joint customers. The broad focus on winning will deliver longer-term, sustainable results for your business.”
—Chris Wong, Co-Founder and CEO, Lifesite

“As we approach partnerships with substantial enterprise firms, we evaluate if they are a good fit by how well they will benefit us and we will benefit them. Nobody likes a one-sided relationship or being forced into a partnership . . . Identify where your value is best spent based on mutual benefits, not your own. We've stuck to this process since day one, and our platform has grown to over 700 companies worldwide following this method.”
—Justin Witz, Co-Founder and CEO, Catapult HQ

Getting David and Goliath to See Eye to Eye 

Obviously, the challenges facing partnerships can often be technical, bound in regulatory/compliance-related hurdles, or just generally complex. But MassChallenge FinTech exists because we know the will and desire for collaboration (and potential for huge mutual benefit) is present on both sides — it's just about getting David and Goliath to see eye to eye.

Applications for MassChallenge FinTech 2020 open September 10. The Financial Revolutionist is an MCFT partner and media sponsor of the MCFT20 Application Launch Party on September 10 during Boston FinTech Week. 

For more information, sign up for MCFT’s newsletter and follow us on Twitter at @MassChallengeFT. 

Luke Lennon is Marketing and Community Manager at MassChallenge FinTech.