I spent most of this week at Money 20/20 in Las Vegas. The show continues to grow— 10,000+ attendees this year— and it continues to be a magnet for banking and payment executives, merchants, fintech entrepreneurs, investors, analysts and plenty of commentariat on all such things.
With more than 550 (!) speakers at Money 20/20, the content was uneven, as one might expect. For every thought-provoking keynote like that of Patrick Collison, CEO & Co-Founder of Stripe, there were plenty of ho-hum recitations of corporate press releases.
“Most People are building cars (FinTech products). We are building Roads.”
And, for every standing-room only panel session like this one, there were droves of drones, droning on.
— Bradley Leimer (@leimer) October 26, 2015
Merchant and Issuer Collaboration
Following Capital One, Chase announced its own mobile wallet app. Chase’s announcement marks their efforts to build an early bridge between the deeply divided camps of merchants and card issuers with the mobile payment solution Chase Pay.
Chase Pay, which will work on “virtually all phones”, enjoys the backing of the merchant consortium MCX, which includes some of the largest retailers in the world, including Walmart, Target and Best Buy, but most early assessments are less than enthusiastic about the customer experience, centered around QR codes. We’ll keep an eye on that, but it does bring one of the largest credit card issuers and payment processors in line with a huge number of merchant customers, and it was hard for me to see how MCX’s CurrentC was going to get traction with consumers.
Collaboration at All Hours
But great conversations were happening everywhere, and not just on stage — in the hallways, in the restaurants and bars, at the casino tables, at private meetings, and at the parties. At Money 20/20, there are always the parties…
Money 20/20 is where kids who were home-bound homework-slaving nerds go to feel like the cast of Entourage.
“Hey, are you going to the Wyclef Jean party at the Tao Beach Pool?”
“Right now I’ve got to drive some Ferraris and Lamborghinis around, and then I have a dinner at the Eiffel Tower restaurant, but I’ll try to swing by later if I can.”
— Julie Schicktanz (@JulieSchicktanz) October 27, 2015
Had an amazing event last night with @MXenabled. Everyone was able to drive Ferrari’s and Lamborghini’s. #Money2020 pic.twitter.com/3Lify426aa— Matt West ️ (@Matt__West) October 27, 2015
Bank and Fintech Collaboration
#money2020 – Lloyds: “Winning fintechs will realize that to scale, they need to partner w/ banks & winning banks will partner w FinTech”
— John Waupsh (@waupsh) October 28, 2015
Lien was speaking on a panel which also included Phil Gilligan, Managing Director, Head of GTO Innovation at Deutsche Bank and Niki Manby, Chief Operating Officer at Citi Ventures. The panel was moderated by Chris Skinner and was titled Responding to Disruption: Are Banks Meeting the Challenge of New Competitors & Changing Customer Expectations?
As anyone who has read or heard me before knows, my answer to the rhetorical question posed in the Title is “Only a few”.
Leaders, Learners and Laggards
We continue to see a power curve distribution in the industry of Leaders, Learners and Laggards. Most are laggards. They think that innovation is for someone else, and they are smart by being “fast followers”. It might be smart, if they put more emphasis on “fast” instead of “follower”.
There is a small and growing group of learners— those that know they need to innovate, and have pockets of innovation, but also know they need to do more.
Only a relatively few financial institutions worldwide can be seen as leaders in innovation. These are those organizations that have both broad and deep innovation efforts, from the incremental to the radical, and they seek to embed innovation throughout the organization. They also connect and collaborate across a broad ecosystem that includes customers, vendors, partners and even potential competitors.
Collaboration at Capital One
One of the innovative financial institutions I have long admired is Capital One. From the company’s philosophy that it is a data company that just happens to be in the banking business, to the work of their three internal innovation labs, to their acquisition of design studio Adaptive Path and the hiring of Daniel Makoski from Google as its first Vice President of design, the company has a knack for being a leader, not a follower.
So I was happy to spend some time this week working in partnership with Capital One Growth Ventures, the company’s one-year old corporate venture capital arm.
On Tuesday afternoon I moderated a panel discussion with Jaidev Shergill and Lauren Connolley from their team. Both Jaidev and Lauren are ex-bankers turned entrepreneurs turned VCs, so they have a broad perspective on the fintech space.
Startups Need Relationships and Contacts
We talked about the unique value a corporate venture capital firm can provide to startups as a strategic investor, as opposed to a pure financial investor. Shergill pointed to the firm’s recent survey of tech entrepreneurs which showed that the top two things they were looking for from their investors were commercial relationships (69.5%) and useful connections (61.4%).
That’s easy for me to believe. I know from first hand experience as an advisor to early stage companies that it’s difficult to sell to banks. Startups can create products from scratch faster than most banks can assemble a meeting of the various constituents.
I asked Connolley if Capital One needed to be a lead customer for their investments, or if they were OK with the companies selling to other banks too. Her response:
“Sometimes we are customer number one, sometimes we are customer number two or three or ten. As long as we all have appropriate privacy measures in place, we’re fine with that. We are especially interested in companies that build platforms that can be used in multiple ways”.
Lauren Connolley, Capital One Growth Ventures
Shergill also talked about his group’s ability to add value from the early stages of product/market fit to later challenges of testing and validating new use cases and achieving scale rapidly. He pointed to their investment in Chain Inc., a startup that builds and deploys blockchain networks to facilitate seamless transfer of digital assets.
“We provide a really unique opportunity to test innovative technologies, and we can connect the companies we invest in to people in multiple business lines to test any number of use cases”
Jaidev Shergill, Capital One Growth Ventures
It’s one thing to add a feature to your existing products and call it innovation, it’s quite another to be willing to disrupt yourself and even invest in the disruptors.
You can learn more about Capital One Growth Ventures at growthventures.capitalone.com, or contact them by email at COFventures@capitalone.com. The firm focuses primarily in the areas of Big Data Technologies, Payments & Commerce, Security & Authentication, and Small Business.
*Thanks to Capital One for sponsoring portions of this post, but all opinions expressed are mine, all mine.