FinTech Myth busting - Selling Technology to Banks

To sell to big banks, most fintechs need to get serious

Selling to large banks as a small fintech is definitely possible, but it’s not going to land you a multi-million dollar deal overnight and you should forget any notion of moving fast and breaking things

I’ve been in the financial services market for over a decade. During that time, I’ve worked at — as well as sold solutions to — tier 1 banks. Big banks move slowly because they’re large, risk-averse institutions managing billions of dollars and millions of transactions every day. And the way they procure new technology solutions reflects this: a lot of people need to give their sign off, a lot of people need to be convinced through multiple rounds of workshops, and their legal, IT security and procurement teams need you to tick hundreds of boxes.

Selling to large banks, therefore, takes a long time — in my experience, it can take years. But, unlike what many fintech companies say, it is not some kind of insurmountable obstacle that requires them to look for workarounds. Instead, it requires a lot of focus and a lot of discipline, across the whole team. The bad news: there aren’t any shortcuts. The good news: it does get easier when you have multiple tier 1 clients.

Here are some of the things I’ve learnt from my decade selling and buying enterprise technology.

Build an enterprise-grade ‘deep-tech’ platform from the outset

Many fintech companies I meet bring the idea of blitz scaling — of moving fast and breaking things — into financial services where I don’t think it can work. When you’re building a food delivery app, failing fast might make sense, but in a heavily regulated environment when billions of dollars and customers livelihoods are at stake, it generally doesn’t.

For sure, there are plenty of areas where iterating fast makes sense, like with microservices, but the underlying infrastructure & platform needs to be stable and dependable. Too many fintech companies build and launch something basic with a view to refining and enhancing later and you can see that because they might be 3 years old and on the 6th iteration of their platform. Not only won’t this fly with the biggest banks that want robust — and ideally tried and tested — platforms, but if you do get lucky and sell to a tier 1 bank, you’re not going to be able to respond fast enough because you’ll be re-architecting the platform rather than delivering what the bank needs. Look at the future state target architecture of the bank and assess whether your platform actually stacks up. Banks are investing billions in new cloud-native technology stacks so don’t assume they will be fooled by a flashy UI/UX layer anymore — start thinking ‘deeptech’ rather than ‘fintech’.

Don’t try to game the procurement process, get your organization tier 1 ready

I can’t remember how many conversations I’ve had with fintech companies who say they’ve solved the problem of long, tough sales cycles by joining a larger vendor’s app store. But fast forward 12 months and either nothing has happened (most likely) or they’re in a sale situation together this with a large incumbent player and the bank is asking them to jump through all the procurement hoops.

The only way to get through big bank procurement processes is to design into your product and organization the level of rigour that a tier-one bank would expect. They’ll probably expect you to have a Chief Security Officer and to conform with security standards like ISO 27001. They’ll expect you demonstrate the scalability of the platform (going back to the point of engineering it properly in the first place). And they’ll expect you to have a legal team who have both the knowledge and the commercial acumen to be able to work with complex agreements and solve difficult issues.

Educate the bank, or risk overwhelming your tech team

So many people selling technology into banks don’t understand either banking or enterprise sales. They’re hired because they’re young and enthusiastic and the people who hire them think that as long as they follow a step-by-step sales approach, all will be fine. But what tends to happen in these circumstances — other than getting outmanoeuvred by bigger companies with better salespeople (and probably worse technology) — is that these people become order takers, making lists for the dev team of the features the bank would like to see in the solution. But the art of selling to big organizations — especially if you’re selling into a new category — is to convey how the technology will solve the banks’ future business needs, 5–10 years from now. That isn’t to say that you won’t have to adapt and evolve the technology for banks’ specific use cases, but first you need to listen to the banks’ needs are and then educate them on how the technology will meet these needs. Furthermore, to achieve a sale, you’ll have to land those same messages time and time again and, if you don’t bring the whole buying team along with you, you’re going to experience blockers at every stage of the sales process.

Start small and expand your footprint over time

When fintech companies talk about winning deals with big banks, they talk about multi-million dollar projects. If this happens, great, but it’s highly unlikely. A much better approach is to try to land a small project and expand from there. This makes sense both because it allows the bank to test you before deploying a much bigger project, but also because it helps manage the risks and cashflows of massive sales cycles which are always binary — they’re either won or lost.

It’s true that most large banks will speak in terms of three or four years, multi-million dollar transformation budgets and we could all get very excited. But we need to accept that most of that spend will go to incumbent (and tested) solution vendors and instead you’ll have to work really, really hard to unpick even a tiny amount of that transformation budget. So, you should start with small projects, build up your knowledge and capabilities so that the bank is prepared to deploy your solution on bigger and bigger projects in the future. Small, high impact projects, increase your chances of long term engagements.

Innovation programs can help, but they’re definitely not a panacea

Lots of fintech companies enrol on bank and other innovation and accelerator programs thinking that these can be a shortcut to enterprise sales. Unfortunately, they’re not. Although they can help.

The reason to take part in an innovation program is that it can be a great door-opener. Banks are always curious about fintech companies and new technology, which can give you great access — even to the most senior people at banks. But, opening the door to a single decision-maker isn’t the same as selling to a bank. Everything I’ve written about above still applies — you’ve got to understand the buying cycle, sell to and educate the key decision-makers and convince everyone on the buying team that your solution is robust and your organization is too.

Closing thought

Many fintech organizations conclude that selling to the biggest banks is too hard and they turn their attention to selling to smaller institutions, which is fine. But not only do large banks represent the biggest financial prize as well as the biggest test of your solution but if you’re looking to change the world like we are at Trade Ledger, then they’re also the biggest conduit to change.