Getting partnerships right with third parties is the central concern of financial technology leaders at banks and startups for 2019.
The theme emerged from an informal survey of banking technology executives and leaders of tech companies conducted by iupana.
Working successfully with outside institutions will help banks adapt to changing circumstances, said executives. But finding the right ones, and making the partnerships work, is hard.
“Differently from the past, when we had a few big tech companies with top tech solutions, nowadays we have a lot of different tech companies popping up,” says Rony Sakuragui, head of Banco Bradesco‘s innovation lab. Many startups offer better solutions than established tech vendors – but also many startups tout buzzwords and miracle cures, he adds.
“So, based on that scenario we face, I would say that my biggest challenge for next year is: How do I select the best and most effective tech, avoiding spending energy with the ‘buzztechs’?”
Mexican bank Banregio is one that already teams up with startups in a bid to amplify its product offering. The challenge for 2019 will be to integrate the new products smoothly – and make the deals work for both sides – say the bank’s executives.
“The big challenge will be achieving good commercial synergies with financial technology companies that we are partners in,” said Mauricio Ballesteros, innovation executive at BanRegio.
In Mexico – and potentially Brazil – incoming Open Banking regulations will oblige big financial institutions to cut deals with new players.
How those deals will work in practice is still being figured out, and poses a big challenge for many in the months ahead. Erick Padilla, fintech & innovation lead at HSBC Mexico, is one. He points to “achieving the successful implementation of our open banking strategy” as the big challenge for 2019.
The move towards open banking may be tough as banks develop application programming interfaces (APIs) and work out the best way to offer access to their data. But more widespread availability of APIs should make partnering easier in future, because many startup offerings will be technically easier to integrate.
“Development of APIs will continue to be the most important and relevant technology in 2019, because of its great ability to combine assets from different companies,” said Anabel Perez, president and CEO at tech company Novopayment.
Hiring, focusing, and growth
Other challenges for 2019 include hiring – a perpetual headache for many financial tech leaders – as well as refining the product and attracting customers.
“Attracting, retaining, developing and organizing talent is still a real challenge. Within that, diversity is a real issue,” said Juan Guerra, chief innovation officer at Citibanamex. The bank is aiming to hire some 400-500 new tech staff next year.
For both banks and startups, perfecting the product offering is a big challenge.
BanBajio, a Mexican bank, is preparing to build a new internet banking model next year. A challenge to doing that well will be in getting the focus right, says Ricardo Granados, director of digital channels at BanBajio: “Making the right choice of projects that are aligned with the bank’s growth strategy.”
And ultimately, for many early stage startups, the big challenge is validating the business model.
“My personal challenge is similar to that of many entrepreneurs – bringing the talent of my team to all corners of the globe,” says Adriel Araujo, co-founder of security startup Hackmetrix.