Real-world Insights for Start-ups & Scale-ups in Financial Services

You don’t have to label yourself an ‘InsurTech’ or ‘FinTech’ to take useful insights from their experience. In our first Guest Blog, Innovation & Customer Lead Associate Shân Millie talks with Kate Bohn, a multi-award winning Innovation Evangelist, stalwart of the UK’s start-up/accelerator community, and currently Lloyds Banking Group’s Group-wide Accelerator/Incubator Lead. What are Kate’s top tips for FinTech start-ups and scale-ups to thrive?

Shân: Kate, we can’t ignore Covid-19, obviously. Why do you think it’s important to still be having conversations like this one?

Kate: Immediate focus has clearly (and rightly) pivoted to deal with Covid-19 – this is an unprecedented experience for us all. But, appetite for meaningful innovation and creating positive change remains. If anything, I believe that this period is highlighting how the very act of open collaboration, leveraging emerging technologies, can solve challenges faster and more effectively. Humans have always moved further together.

Shân: So you’ve spent 20 years working with a variety of stakeholders, clients and agencies, dozens of start-ups and tens of incubators and accelerators — you’ve pretty much seen it all! If we kick off with start-ups — what are you looking for when wearing your Lloyds Banking Group ‘hat’?

Kate: I think start-ups are a terrific way to deliver amazing content and enable the ‘Bank of the Future’ to be delivered ever more quickly, particularly as partners with incumbents. It’s one of the many reasons that I love working in this space. But often there’s too much emphasis on growth and expansion, and not enough critical thinking around how to position the offering and its future growth. So I’m looking for teams that can show me they’ve asked these 6 questions:

1. What are we for? Are you essentially a ‘feature’ — a missing piece of the puzzle that enables a certain capability or service within a larger user journey or experience? If so, should you be positioning to be bought? Are you solving a problem in its entirety? How important is that problem to the firms you are pitching towards?
2. Are we sorted on the basics of corporate finance? This is about the nitty-gritty of funding mechanics. Start-ups can lose anything up to the equivalent of a whole person’s annual salary in FX fees or funding transfers. I’ve seen this in international expansion, too: funds not received in pounds, then placed directly into a GBP-based account. Get that conversation with your bank ahead of time!
3. Do we have clear, substantiated Risk, Growth, Business and Commercial Models? From experience, this is the sort of stuff that won’t necessarily be taught in accelerators and incubators. A different type of support may be needed here.
4. Do we want/need to keep our business ‘local’ to achieve our desired growth? If your target consumers are ex-UK, what does that mean for you AND them, and how is that reflected in those 4 models?
5. Are we trying to have a conversation as to how we might create benefit for our target consumers and their end-users — or just generate a ‘sale’? The latter approach is unlikely to create trusting conversations that speed the process. For me, the ability to see beyond a quantifiable or immediate value in a dialogue, makes a business stand out. Onboarding and governance within a Regulated Industry does not encourage rapid-fire signing of contracts, and as we’ve seen in recent weeks, unexpected factors can overtake genuine appetite for pace.
6. Are we really up for actively learning from the potential consumers we engage with, and focused on incorporating what we learn into our models? Especially important with pricing structures, and is usually under-done. Start-ups owe it to themselves to consider the range of models to distribute their capability — modular, licensing-driven, enterprise — and what this means to everything else.

Shân: It’s fascinating — and I’ve seen it myself — that although basic (as you say), those 6 questions are so commonly not addressed, or incompletely. Looking now at scale-ups — what does your experience tell you really matters?

Kate: I’d distil stuff down to 4 main points:

1. Moving into another vertical is not a ‘cloning’ operation. I’ve seen firm’s base business-critical decisions on a theoretical fit, and nothing more. No matter how established you are in one vertical, you’re still dealing with regulated organisations and extended timelines. It may also be that while there are common challenges, what’s critical to one vertical, may not be to another.
2. Consider hard what you’re prepared to do “at-risk”, like Proof of Concept. That probably means considering doing more for no fee than you thought. But once your capability, the impact, ROI are proven, get a Letter of Intent, and clarify how you move into a “paid-for” cycle, like a Pilot. You’ll probably have gone through the same level of due diligence needed for a “paid-for” engagement, which means you’re ready to go, with key internal capability sponsor where you need them.
3. What’s your primary goal for the relationship? A customer, a partner, investment or to be bought outright? It saves time in the long run on both sides.
4. And then we come to Trust…probably the most important element of all! Reciprocity matters and it doesn’t get sufficient focus. I don’t mean surrendering your IP, I’m talking about generosity with what you know, who you know, and how they might support your new or existing contacts in attaining their own A truly collaborative mindset generates huge goodwill. It’s a sound strategy for a business to flourish and I recommend that everyone give it a go!