The need for African banks to innovate at a quicker pace and access new customer segments is reason for the increasing number of financial institutions partnering with fintech startups.
Disrupt Africa reported last month on how we are unlikely to see vast number of banks acquiring fintechs startups but there is evidently a trend towards banks signing deals with startups in order to leverage on their expertise.
Part of the reason for this is that startups are capable of doing things banks cannot, like innovating at a fast pace. “Fintechs are developing and applying technology at speed and in a manner that conservative and risk-averse banks traditionally aren’t good at,” van der Veen said.
“They are rapidly creating new client value propositions, with less friction, and are able to deliver this at scale. Furthermore, successful fintechs are hyper-focused.”
The benefits of partnering with startups to bank go beyond just the ability to innovate at speed, however. Keith Jones, co-founder of the Sw7 incubator, says fintechs are challenging the way business is being done.
Through partnerships fintechs offer financial institutions ways to reach and acquire unbanked and underbanked segments of the population through the creation of profitable and useful services for lower market segment clients.
Working with startups can also serve to change the way a corporate business thinks, which will bring further benefits down the line.