Great post today by Erin Griffith on PandoDaily about the nature of innovation at financial institutions:
Startups in the finance industry face a set of challenges so unique that, without help from accelerator, they have no real chance of survival. Finance startups need accelerators because of their mentors -they need someone to teach them to sell to the legacy industry they’re disrupting.
The six startups that FinTech Innovation Lab graduated today seemed successful enough. But the world of finance is so backwards, slow-moving, and risk-averse that even if they managed to get any major institutions to agree to use their products, it’d take them years to actually implement it, facing mountains of red tape and miles of hoops to jump through.
In startup time, a few years is long enough to run out of money.
It’s not even the banks’ fault, necessarily. There is compliance, regulatory oversight, security, and risk to consider. Consumers don’t necessarily want their banks to be terribly innovative. It is the bank’s first responsibility to safely store your money, after all. The elaborate systems of checks and balances are there for a reason.
Still, they’re stifling innovation. “Banks won’t give you a quick yes or no. They’ll give you long maybes until you die,” Yaron Samid, the founder BillGuard told me. “Even if they say yes, it takes 36 months to deploy.”
Read the entire article: More Than Any Other Industry, FinTech Needs Accelerators | PandoDaily.