With the blockchain, artificial intelligence, the Internet of Things and other digital technologies promising to bring new disruption to established industries, every company today needs to be a technology company with a strong ability to innovate.
However, companies in established industries such as financial services face roadblocks such as a lack of in-house digital skills, conservative corporate cultures and legacy systems. Partnering with FinTech companies and other tech start-ups offers them a way to experiment safely with new technology, access leading-edge skills and prepare for the digital future.
Since 2012, the top ten US banks by assets under management have participated in funding rounds totalling US$3.6B to around 60 FinTech companies (https://www.cbinsights.com/research/fintech-investments-top-us-banks/). This is a model that financial institutions in South Africa could emulate as they seek to fast-track their innovations in mobile payments, blockchain and other emerging tech areas.
Large, mature companies today find it difficult to innovate and build exciting products and services, delivered to users via digital means and platforms. These companies, with large technical environments, legacy systems, corporate structures, out-dated delivery processes and organisational distractions, are finding it difficult to attract and keep users with product and service offerings that do not keep up with the times as they are generally encumbered with running ‘business as usual’.
Start-ups generally have agile environments which encourage ideas and innovation to come from anywhere in the company. They typically have a safe-to-fail environment, so people have more confidence to get involved and try out new things and with a small user base to start out with feedback are generally quick and changing direction is immediate. One important aspect that makes start-up businesses more agile is that there is usually a single driver, typically the owner, for each project as oppose to multiple stakeholders with their own way of doing things and their own engagement requirements and expectations.
Partnering or acquiring start-up businesses is not a new concept, but seems to be overlooked by many companies as a viable solution to their innovation conundrum – history is loaded with examples of opportunities taken and opportunities missed…in the spirit of businesses wanting to become more agile, partnering with a start-up might just be the most sensible and most “agile” thing an incumbent can do.
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