At the moment, there’s an explosion of complexity in payments. Payments businesses have yet to solve that complexity for merchants.JONATHAN HUGHES, CO-FOUNDER, CEO POLLINATE HORIZONS.
What is a FinTech Partnership?
FinTech partnerships are allowing a mutual ground to benefit from each other’s strengths — this is the main factor as to how they differ from traditional investments.
Hughes says partnerships allow Pollinate to move “in parallel” to banks, which is a lot faster than trying to overhaul legacy tech. “You intersect the bank’s systems’ if you had to do a hard integration it would be really time consuming and complex. We take data feeds from banks and processing partners and transform the data within our technology so it’s easier to wrap around the banks’ core system,” he explains.
It’s a model that’s fast-gaining traction and attracting a new wave of investment in the world of FinTech. It is often proven to be a successful model too with Pollinate closing a funding round at the end of 2019 having raised a total of £60mn with backing from payments giants such as Mastercard — a company Hughes says he sees huge potential to work with.
New or Improved Technology Capabilities
Banks are under increasing attack from FinTech players and are needing to step up in order to compete in the constantly adapting financial markets. Companies like Pollinate are one of the ways banks are choosing to adapt and connect digitally to SMEs. The needs of SMEs are changing — finding ways to grow their business, manage fully integrated data flows, offering loyalty and offer schemes, are all elements that they are looking for from their respected banks. The Pollinate platform offers these solutions for traditional banks to offer their SME merchants to fulfill these needs. Tyl By NatWest was developed with Pollinate, and launched in 2019, and answers a lot of the needs of modern day SMEs whilst allowing NatWest to enhance its reputation and develop innovative new services.
Companies like Pollinate are giving traditional banks an edge by offering a blend of agility, innovation and a strong understanding of the existing landscape. “Banks have an enormous amount of trust, customers relationships and data,” says Hughes, adding that this is why the business, whose offices overlook the Bank of England in the heart of London’s financial district, decided early on it would work with banks as partners.
Pollinate is made up of an extremely experienced team — including Alastair Lukies CBE, who is chairman of FinTech Alliance, co-founder of Monitise and a member of the Prime Minister’s Business Council. An experienced team is an instrumental factor in order to build relationships and to understand the pain points faced by today’s financial institutions — as Hughes demonstrates. “The big challenge banks have is the vast majority of spend, people, energy and effort is around managing their core banking technology,” he outlines.
Legacy technology needs quite a lot of work to keep the lights on. They’re also still being absolutely hammered by regulators — quite rightly — over the fallout from the global financial crisis. So the whole mindset at the moment is keep the lights on, manage risk… there’s very little left over for innovation.”
New Acquisition Channels
FinTech partners are one of the new realities for traditional banking institutions to open up new acquisition channels because they don’t eat up the resources within the bank itself. However, as Hughes is quick to point out, such partnerships are mutually beneficial. “FinTechs need more of that bank-like sense. While banks need more of an innovative, risk taking mindset, the FinTechs sometimes don’t have enough of that ‘steady as she goes’ mentality to manage risk, security and compliance that leads to trust from consumers.”
How are FinTech Partnerships Helping Small Businesses
FinTech partnerships are indirectly helping small businesses. They allow companies like Pollinate, who are directly creating and innovating new ways to support SMEs, to share the resources and knowledge that the likes of Mastercard have. This is in order to help them create a result that neither could create on their own in the time they could when working together.
Improved Digital Customer Experience
FinTech partnerships are allowing traditional banks to enhance their digital customer experience and offer a suite of products that meet the needs of the banks and their merchants — similar to the partnership between Mastercard and Pollinate.
Mastercard’s global reach will be especially beneficial on Pollinate’s expansion journey – at this stage, the FinTech is looking for more than capital. “We like to work with investors that aren’t just financial investors, but who also bring something to the table in terms of their own experience and view of the market, helping us grow the business,” says Hughes, adding that it’s common for a FinTech to look for expertise and ability to help more broadly with the business.
This journey of expansion has taken Pollinate to Australia, South Africa and Canada in recent months. “In each of those market’s we’ve spoken to most of the big banks, and we’ve already got several banks that will continue to work with us,” says Hughes, citing the NatWest success as a key driver of these relationships.
The key to international success has been our credible story of getting the UK’s biggest bank back into the acquiring market.
Serving New Customer Segments
As engaging with traditional banks becomes increasingly important for FinTechs, what advice does Hughes give for those seeking to build a strong partnership? “The key point of dealing with banks is to figure out the right way to engage with them and the right level,” he explains. That’s why Pollinate’s experienced team has been so important – to marry strategic credibility with on the ground expertise.
We’re able to engage with banks at a senior level; it’s a top down approach because what we do is more strategic for the bank. But if you’re a younger entrepreneur, the key is to understand who you’re selling to and make sure you’re talking to the right people.
As well as looking to new markets, Hughes is equally excited about the plans to build on Pollinate’s core product offering and being able to respond to the needs of SMEs in the current crisis. With an Open Banking payments solution and an order-ahead product to help cafés and restaurants manage their takeaway and delivery customers being just two examples. “Both of these solutions enable our bank partners to deliver real benefits to their merchants — Open Banking gets payments to merchants faster and cheaper, and the order-ahead functionality allows a small business to get back to serving their customers when their physical premises are closed.”
For Pollinate then, no matter how many partners it gains, the focus will remain on enabling small businesses to grow through reliable, easy to implement tech that can be scaled easily —which in the years ahead will be more critical than ever before.
Jonathan Hughes, Co-Founder & CEO Pollinate Horizons
Base on the article by the FinTech Alliance