Disruption is now a buzz word throughout the global business community. No matter the industry, existing modes of business are being challenged and established paradigms are being overturned.
One of the industries that is in the middle of this evolution is the financial services industry. Long viewed as a bastion of tradition, finance and financial institutions have become a focal point for change.
Banks are facing numerous challenges, according to Spencer Jones, FIS Enterprise Product Officer and Senior Vice President of Product Management. One of the major challenges is a fundamental questioning of what a bank is.
“At the end of the day, the financial industry is facing a variety of challenges. One is: what is the purpose of a financial institution? You would think it’s self-evident, but it’s actually beginning to get questioned,” he said.
These challenges are driven by a confluence of factors, from nontraditional competitors entering the financial services sector to changing markets. However, one of the major challenges has been the rapid evolution of technology and how it has impacted consumers and changed the way they interact with banks.
According to Jones, the major change technology has had is changing the dynamic between the institution and the individual. Previously, the dynamic was essentially asymmetrical, with the financial institution having greater knowledge than the consumer. Increased technology and usage has leveled the playing field, he says, to create a more symmetrical dynamic.
Another technological challenge the financial services industry faces is the continued use of legacy technology. “When you think of FinTech, so many financial services organizations have a lot of legacy technology within their infrastructure.Financial institutions are challenged to replace a lot of the legacy [technology] with what the consumers really want,” Lynn Roche, Executive Vice President of Integrated Financial Solutions Banking Division at IFS.
To meet these challenges, institutions like FIS are turning to startups to develop innovative solutions that can help them meet the challenges of the present and the future.
For the fourth consecutive year, FIS is partnering with the Venture Center and the state of Arkansas to accelerate FinTech (financial technology) companies from across the country in order to develop ideas and new solutions for existing problems.
“Great ideas come all kinds of places. They come from customers, employees, competitors, partners. Great ideas get uncovered everywhere,” Jones said. “That’s the intent behind this: Try and make sure that we’re talking to young startups, understand the problem they’re looking at, how do we partner with them, how do we learn from them, how do we accelerate them, and how do we accelerate from that?”
Executives and business leaders from Little Rock and other the country gathered in Little Rock at the Venture Center on Wednesday for the kickoff of the FIS FinTech Accelerator program.
During the kickoff, the 10 participating companies were announced for the 2019 cohort.
The cohort consists of:
- Digital Onboarding (Boston, MA)
- Gremlin Social (St. Louis, MO)
- Sendmi (Lehi, UT)
- ChangeED (Chicago, IL)
- Voleo (Vancouver, Canada)
- Neener Analytics (Sunnyvale, CA)
- Genivity (Chicago, IL)
- Curu (Charlotte, NC)
- Highside (Bethesda, MD)
- Mimble (Portland, OR)
“The 10 startups that are currently here represent a variety of different areas, whether it’s wealth and retirement, whether it’s digital experience, or social media,” Roche said. “We have a really good mix of organizations participating in the accelerator program this year.”
During the 12-week program, the companies will receive “in-depth mentoring and training from FIS and The Venture Center as well as a monetary investment,” according to a Venture Center press release.
FIS is working with the startups and has partnered each startup with its employees to provide insight into the banking process. “They are providing mentoring to them about how they might think about their solution through the lens of the consumer,” Roche said.
Since its inception, the accelerator startups have generated $28 million in revenue and have created over 450 jobs. In addition, FIS has partnered with five of the startups in previous accelerators to develop solutions.
Approximately 225 companies from across the United States and from 31 different countires applied for the accelerator. Choosing the 10 startups for the program was an organic process, according to Jones.
“We spend time interviewing them. Does the leadership of the organization make sense? Do the problems they’re solving make sense? Do they have any way of solving the problem that’s clever and innovation?,” he said.
“Our selection process combined with the extraordinary resources that FIS and the state have dedicated to this program is what has made this program a success,” Wayne Miller, Executive Director of the Venture Center said in a statement. “We’re grateful for the continued collaboration with the FIS team and are excited to be kicking off the fourth program this year.”
While the banking industry isn’t going away any time soon, it’s rapidly evolving. Startups like the ones in the FIS FinTech Accelerator are charting a path for how banks can continue to transform their business model and support their customers.