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Partnering with fintechs and startups in 2020

Updated: Sep 8, 2020

In the last few years there has been an explosion in the financial technology (fintech) scene. This phenomenon is driven by the rapid technological advances in distributed ledger, artificial intelligence, cloud computing and machine learning to name a few. The growth of fintechs can also be attributed to changes in regulations, digital and new business models.

In this article we are going to talk about a few aspects of partnering with fintechs given the uncertain times we are in now and how to work with them so that you have a balance between getting access to cutting edge technology while managing your risk exposure as well.

Fintechs are typically startups who may not have a solid financial base like your regular technology vendor. So you need to be comfortable with the possibility that they there is a risk of them winding up given the economic uncertainity we are seeing in the world today due to the pandemic. So do be selective in who you partner with and do the necessary financial and technology due diligence as early as possible.

As you proceed with engaging with these new tech startup companies you should be cognizant of the fact that you cannot compare them to established industry leader and multinational technology companies. They do not have the same cost efficiencies, and you do need to pay them for the work that you commission as its in your best interest that they stay in business to serve you. As they may only have a few client this is even more important. Dont try to undercut a startup on pricing, its counterproductive.

Raise you awareness

  • Be very clear on the problem you are trying to solve let the technology selection be evaluated by the best people in your organisation - get the architects and engineers in. Avoid going down the path of wanting to just do something with a fintech and then finding the use case to support it. Quite a few companies have probably gone down this route.

  • Fintechs dont know your business as well as you do. They may have developed some cutting edge software but thats where most of them stop at. What this means is that they dont always have out of the box solutions for your to plug into. So expect to spend time customising.They dont always know what the business logic should be and what the real life use cases are. So you will have to bring that level of awareness to them.

  • Fintechs are great to get an idea of the ground as they are nimble and agile. They have smart people who can pull together prototypes in a jiffy! The folks in a fintech are highly driven and passionate about their job and and delighting customers. They thrive on challenges and delivering great software to their clients.

  • Your business model could easily be made available by the vendor to another company, perhaps even your competitor. So you should be thinking about protecting your idea and intellectual property.

  • Expect your first few releases to have hiccups as the company is probably setting itself up and they have kinks to work through. Project delay in inevitable as both parties are new and are in the discovery phase.

Be ready for

  • A high cost base, fintechs dont come in cheap. You will have to pay a fair price to get access to their intellectual property and their technology. Know what will you get and what you wont, including their product roadmap, sevice releases

  • Fintechs focus on their niche space. They typically do that one thing they do very well and do not try and solve the customer problem or the user journey end to end. Dont expect them to deliver you a one stop solution for your entire product.

  • A lot of hand holding will be required from you. Many have not delivered software to large scale organisations. They dont know the technology / vendor approval process and the level of scrutiny which they will go through.

  • Tough contract negotiations as they will want to extract maximum commercial value from whichever clients they have. Put in an exit clause just incase both organisations cannot get along. This could be due to working style, lack of structure, governance or revelation that the technology cannot do what it claimed.

The nay sayers

  • You will have to face off the internal nay sayers who will the build the case for developing what you need internally. Conceptually it may sound fine but practically it would not be possible to develop that level of sophistication in house.

  • There will be those who will say that the technology is unproven. Work this through with them, give the fintech the opportunity to respond to all the technical questions. You will have to provide aircover and give them the level of protection to ensure they dont stumble and fall.

  • You will need to help the statup to fine tune the narrative as they muddle through their way across the organisation. They need to stop talking in their lingo and get to start using the lingo your company uses so that they blend in quicker and dont sound like they have come from another planet. Remember there are many people who are not vendor / consultant friendly and will take every opportunity to discourange you.

  • As a product leader you are obviously trying to do something innovative with the startup. Makes sure you have your own bases covered and your management team is behing you. The vendor must feel confident that they have a place which they can feel comfortable to work in. If there is uncertainly on the project and its funding, news will get around quickly.


You will play the role of a mentor to this new company. Be prepared to spend a lot of time with them. While you coach them, you should also extract value from them. Learn about their technology and the kinds of use cases they are working on. There is an opportunity for this partnership to be a two way street. Make the collaboration a win-win for both companies and have fun along the way, treating each other with respect.

Whats that MVP?

Be very clear on the definition of the MVP. You will pay the price for not thinking through the MVP and for not defining your user stories. The companys aim is to get something live as soon as possible and to start charging. So they will want to treat MVP as a POC, but you may not have the luxury of taking such a light touch POC approach, you may need a MVP which is a product which a customer can actually use. Capital today is expensive very few projects have money to experiment and to play around with new technology. There is pressure for every dollar to count. Get with the programme and get that MVP right and live quickly.

Don't let that backlog drag you down

As you go through the sprints be careful to not have too many user stories being thrown into the backlog because your vendor tries to just get the bare bones done. Be fair, strong, decisive and clear on your priorities. Dont spend effort on bells and whistles. Make sure that the design of the system is built based on the latest architecture and ready to be scaled up.

Keep your cost of change and customistion low by deploying on the latest infrastructure.

In good times you will be seen as a leader for putting your bet on a startup, you may come across as being a visionary for taking such a bold step where you may even be changing how your organisation embarks on new projects.

In tough times the opposite is true, with cost pressures you wont have the same luxuries. Many startups are closing shop as they cant continue to operate as their income flows are drying up. Opportunities to get new clients are also slowing down as the pandemic has directed corporate resources to other priorties. Innovation in some areas has taken a pause if the use case is non-mission critical. Be realistic and hold off if you have doubts on the timing.

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