EXCLUSIVE—Should banks acquire or partner with smaller, more agile fintechs?
Well, that depends if the end goal of the bank is to further financial innovation, Derrick Walton, EVP of global financial networks for Hyperwallet, told Bank Innovation.
“There’s a difference in culture, in what the goals tend to be,” Walton said, who is responsible for working with emerging companies and networks in the space for Hyperwallet, which provides global payment solutions around the globe.
The fault with banks is that “there’s going to be a push to quickly make it profitable,” Walton said, instead of “letting the fintech do what it needs to do.”
Begun in 2000, Hyperwallet cannot quite be described as a payment fintech, but its “preferred choice” for business is to work with other, smaller startups through partnership, Walton said.
If a bank folds a fintech into their innovation team via an acquisition, there is a high chance that fintech will lose the agility that is so highly prized for banking innovation due to regulatory concerns or cultural differences in the bank, Walton said.
“[The culture] will completely slow everything down, if that happens,” Walton told Bank Innovation. “You want to let the fintech still do what they do [within the bank].”
Banks should also begin to consider the roles of larger technology or social media companies like Facebook and Amazon, who are already moving into areas of fintech that “make sense” for their model, Walton said.
“Sooner or later, [these companies] are going to say, you know what, we can offer you ‘Amazon Pay,’” Walton said, adding that Amazon and similar companies are likely to have a larger role in the financial services world in the next few years, when asked.
If these companies show more of a willingness to partner with fintechs or technology companies outside of financial service incumbents —Hyperwallet just recently began facilitating AUD Transfers for Amazon Sellers — the role of traditional banks in the ecosystem could quickly change.
To learn more about the latest developments in fintech partnerships and online payments, join us on March 5-6, 2018 at the Parc 55 in San Francisco for Bank Innovation 2018. Click here to register.