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Banks and startups: How to find the perfect fit

23 December 2015  |  18511 views  |  3 Collaborate

Menno van Leeuwen, head of the innovation centre focus team at ABN Amro discusses the challenges and opportunities for banks working in collaboration with fintech startups.

From Experimenting to better selection

At the Innovation Centre, we have embarked on more than 15 partnerships with start-ups over the past year. We deliberately set ourselves a number of learning goals. We were mainly focused on experimenting: what happens if you bring together two totally different organisations? And are the technological solutions you develop together actually perceived as solutions and used in the way you had imagined? Partnership was thus not seen as an end in itself, but as a means of learning. And we certainly did that.

In reality we regard all the partnerships as successes, even where they didn’t lead to the envisaged end results, or where it turned out that we weren’t a good match for a particular start-up. Even those partnerships produced lots of valuable insights for both parties. On the other hand, the experiments led to a number of lasting partnerships – enough for us to be able to talk of collaborative innovation. The question now facing ABN AMRO is how we can use all the lessons learned to find more start-ups with the right organisational match and the potential to scale up.


Hypes, unicorns and the sweet spot

I am also seeing a trend starting in the market towards scaling up and collaborative innovation. It’s very telling that Neelie Kroes, the Dutch Special Envoy for start-ups, talked almost as much about scale-ups as about start-ups in her speech at the How To Get There Summit. Personally, I think it’s not before time that these businesses are receiving more attention, with examples like Catawiki, Elastic Search and WeTransfer. The media focuses almost exclusively on hypes: failing start-ups or overvalued unicorns. That’s hardly surprising if you look at it clinically, because we’ve known for years that the success rate for start-ups is around 10% and that pumping investment capital into growth sectors generates overvaluation

If you look through the hypes, the underlying trend remains the same. The impact of technology is knocking some sectors out of kilter and rendering existing business models out of date. That’s why it remains key for start-ups to scale up rapidly, while corporates need to do all in their power to become more flexible. Somewhere in the middle is the sweet spot for FinTech partnerships, and that’s what our bank is looking for.


First scaled-up partnership achieved

The recently announced beta release of ABN AMRO Grip is a great example of this. This app, which gives clients greater control of their financial affairs, is based on a concept and technology developed by Tink, a Swedish FinTech start-up which was looking for a partner in ABN AMRO that would enable it to scale up internationally.

During the beta phase, the service is only available to 10,000 clients. This is the first time the bank has used this approach: normally, we would launch a fully functioning product for all our clients at once. We are thus quietly becoming more flexible and increasingly starting to work like a scale-up: constantly improving and growing thanks to feedback from users.


Digital Impact Fund

Our Digital Impact Fund creates a strong bridge between the bank and start-ups looking to scale up. It is aimed at businesses with a strong basis: a functioning service, a large group of users and a stable turnover. In addition, it must be possible to integrate the service smoothly into our infrastructure, and the cultural fit is also important. Things have to ‘click’ organisationally. We can then bring a product to our clients more quickly.
Scaling up our innovation ecosystem

Plans have been in the air for years to create a meeting place for innovative companies in the centre of Amsterdam, following the example of San Francisco. Together with TSO, we have created Munt Square, a co-working space in the heart of the city which shows how important we think it is to have a location dedicated to innovative talent.

The decision was quickly made when The Next Web asked us to become a founding partner of ‘X’. This new innovation hub brings together a strong mix of ambitious tech start-ups and experienced corporate partners such as Google, Booking.com, KPMG and ABN AMRO, and has the potential to become the scale-up hub of Europe, offering scope for the individual start-ups to grow to around 20-25 staff. For ABN AMRO, X offers a great opportunity to strengthen our position within the start-up community, as well as providing us with an environment in which we can set out to meet our FinTech ambitions.


New Year’s resolutions!

FinTech will become increasingly mature in the Netherlands. Following the success of Adyen, we are now waiting for the next scale-ups. In London, you now can’t move for FinTech initiatives, but we in the Netherlands have an opportunity to grow into the strongest FinTech hub on the European continent. To do this, we will first have to create an environment in which FinTech start-ups, corporates and financial institutions are given the scope to work together.

‘X’ offers the ideal location for this cross-fertilisation to take place. But opportunities will also arise elsewhere. For example, Holland FinTech has grandiose plans for its own FinTech building. So there’s plenty still to do in 2016: let’s scale-up FinTech!

Menno van Leeuwen is manager at the Innovation Centre, ABN AMRO’s 'corporate garage' in which the bank experiments with innovative business models that are relevant to society. His team focuses on smart transactions, peer2peer finance, start-ups & fintech, and the bank as a platform.

Comments: (3)

Hitesh Thakkar
Hitesh Thakkar - FIS Payments Software and Services India - India | 23 December, 2015, 11:14

Why bank wants to follow Trail and Error method of engaging with Startups as there can be assessment and evaluation methdology build to on-board startups which can bring meaning to 'Connect' to the bank's business goals and innovation road map.

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Bogumil Latos
Bogumil Latos - T-Systems Poland - Warsaw | 04 January, 2016, 21:18

Hi Hitesh

You ask Why? First of all because of costs reasons. Secondly because of chance of useing "light" and flexibile solution to accelerate own sales process :)

I have a question to you. Why do you set the rule StartUp=Error and Trial?

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Hitesh Thakkar
Hitesh Thakkar - FIS Payments Software and Services India - India | 05 January, 2016, 10:05

Bogumil please refer the link in para as mentioned in post - (Munt Square)

Together with TSO, we have created Munt Square, a co-working space in the heart of the city which shows how important we think it is to have a location dedicated to innovative talent.

Menno has mentioned in detail on ABN's FinTech story and mentioned about Trial and Error approach.

I have been tracking Bank to Startup Funds and partnership space and I feel there need to be methdology to onboard startups to save time, energy and expectation on both side - Collabrative Innovation.

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