The Customer Effect

Why big banks are helping financial tech startups

  • Accelerator programs allow banks to partner with financial technology startups to help them grow their businesses and develop new products.
  • The Finlab program, supported by JP Morgan Chase, helps startup entrepreneurs forge connections with larger companies, nonprofits and regulators.
close

Email a Friend

Why big banks are helping financial tech startups
Financial technology has been called a disruptive force for big banks, but the growth of startup accelerator programs shows how banks are trying to change that conversation. Finlab, short for Financial Solutions Lab, is an 8-month startup accelerator program funded by JPMorgan Chase and run by the Center for Financial Services Innovation. It just sent out its third call for applications from financial technology startups working on tools for underserved populations. It’s an example of how banks are now partnering rather than competing with startups -- a trend that's grown quickly over the past couple of years. “First and foremost, these big companies need to show that they can play nice with startups -- that they’re investing directly or indirectly in startup efforts,” said Ryan Gilbert, partner at San Francisco-based Propel Venture Partners. An accelerator program helps early-stage companies develop ideas beyond the concept phase. The goal of these programs is to develop outside talent or new products that would be hard for banks to do quickly on their own. Most major banks have their own programs, including Barclays, Wells Fargo and Citibank. Chase has a couple of them, including an “in-residence” program along with Finlab. “The driving motive is where we as a firm can contribute our assets and our expert networks to help some of these early stage financial technology innovators get to the next level,” said Colleen Briggs, executive director of community innovation at JPMorgan Chase. Banks also have the added advantage of working closely with nimble startups in technology, which opens up a new pool of talent to them in an industry in flux. Finlab began two years ago, and winners get $250,000 of capital, one-on-one mentorship and networking opportunities. About eight or nine winners are picked each round. Winners participate in a series of workshops across the country on how to grow their businesses, including a session on regulation. Participants say they’ve benefited from introductions to contacts in business, government and nonprofits. “If you need a banking relationship, it can take upwards of 18 months to partner with them -- they have to vet you and see if you’re worth the risk,” said Alex Marlantes, CEO of Everlance and a member of Finlab’s second graduating class. “What this program does is let you partner with them. They also help you get a seat at the table with regulators.” One early success story was the bill payment app Prism, part of the program’s first class. Within a year of joining Finlab, the company was acquired by PayNearMe -- a milestone that was possible due to the mentorship that the program offered, said Tyler Griffin, who is currently entrepreneur-in-residence at the Center For Financial Services Innovation (and co-founder of Prism, which he has since left). Big banks are likely to keep supporting these programs -- not only for relationship building, but also because startups are working on areas major banks aren’t addressing, said Gilbert. “We’ll see more and more companies saying ‘well we want to be part of this -- it’s our way of learning about the startup ecosystem and showing that we’re good partners.’”

0 comments on “Why big banks are helping financial tech startups”

The Customer Effect

How are consumer habits and spending changing due to economic turbulence?

  • Economic turbulence is changing consumer spending.
  • 66% of people say that the current economic situation is making them reconsider how much they put aside for their emergency fund, while others are pushing away travel plans and dipping into their 401k.
Rabab Ahsan | April 27, 2023
The Customer Effect

22% of Americans think ‘net worth’ only applies to wealthy people

  • American consumers are more aware of celebrity net worth than their own.
  • Younger consumers, those heading towards retirement, and women are the most likely to not keep track of their net worth.
Rabab Ahsan | April 20, 2023
The Customer Effect

Trouble in paradise: How layoffs are affecting consumer relationships

  • The recent wave of layoffs is impacting consumers’ relationships.
  • 80% of those who were laid off themselves would consider leaving their spouse if they got laid off, too.
Rabab Ahsan | April 14, 2023
The Customer Effect

Quick Take: Scrutinizing the impact of inflation on consumers’ finances

  • Troubles in finance paradise continue. With passing months these anxieties have been growing and are reflected in other parts of customers’ financial habits as well.
  • With rising inflation, how are increasing rents, embedded finance, & layoffs affecting consumers' financial anxieties?
Rabab Ahsan | April 05, 2023
The Customer Effect

The White House is proposing an increase in the capital gains tax. What will non-white groups gain?

  • The White House is proposing a hike in capital gains tax as part of a deficit reduction plan.
  • The taxation system in America needs another look, so far the balance has been tipped in the favor of investors and white households. Will the capital gains tax rebalance the scales?
Rabab Ahsan | March 15, 2023
More Articles