Banks and other financial institutions remain extremely wary of working with fintech firms, particularly in Ireland where few are willing to give start-ups the endorsement they need to help secure business elsewhere.
That is according to speakers at the Adminovate Conference, which took place in Trinity College Dublin last week.
Attendees at the event, which was organised by Irish fintech start-up Fund Recs and Norio Ventures, were also told that companies looking to break into the funds sector and elsewhere need to be disciplined at what they do because it is “very easy to do a bad job in fintech”.
Peter Cripwell, chief executive of RiskSystems, a company that provides daily risk reporting and investment restriction monitoring for companies such as Credit Suisse, said while it was easier to get a meeting with financial institutions these days, it was still hard work winning contracts with them.
“Banks and financial institutions are more willing to talk to fintechs now and that is a significant advance on the situation five years ago. However, in terms of the procurement procedure they are still very risk adverse,” he said.
“You have to try and design around very conservative mindsets so in dealing with them [the banks] you need to stick with what you’re good at and provide them with exactly what you’ve promised. There is no time to experiment because it is easy to do a bad job in fintech and there often aren’t second chances,” Mr Cripwell added.
Risk
His claim was echoed by Bert Boerman, co-founder and chief executive of Governance.io, an investment fund oversight solution.
“Fintech firms need to understand that nothing has changed when it comes to the procurement process. Banks still move very slowly. This is largely because there is nothing to gain by taking a risk on innovation but there are huge downsides if it screws up,” he said.
Andrew Patrick White, founder and chief executive of FundApps, a regtech firm that provides compliance and regulation monitoring services to asset managers and hedge funds, said many financial institutions were afraid of fintech solutions because of a fear that they would be used to replace staff.
“It is a bit of a turkeys voting for Christmas scenario when you go in to do a presentation to people who fear that your solution may end up replacing them,” he said.
This fear means that financial institutions are slow to embrace new technology coming from start-ups.
“Your grandmother probably has more sophisticated apps on her iPad than many banks have inhouse,” Mr White added.
Geraldine Gibson, chief executive of Maynooth-based regtech firm AQMetrics, said established lenders in Ireland were particularly bad at putting their trust in local fintech firms, something she said needs to change.
“If a firm is saying they can provide a service that any other global provider can do then there should be support for them. There is super talent in Ireland and we can do as good a job as any other company but we have to be given the chance. An endorsement in the local market is important and the adoption rate at it stands is less than it should be right now,” she said.
