Project Description

Red heart art installation with multi-colored eyes on itIn the years leading up to 2018, investors have had a love affair with fintech. As of January 2018, an astronomical $80 billion1 was invested in fintech companies, the highest to date.

Investors had good reasons to love fintech, says Braden More, head of Partnerships and Industry Relations at Wells Fargo. These new companies brought disruptive technologies and much-needed innovation to the financial sector. They enabled mobile payments, robo-investing, and deployed machine learning to disrupt lending practices in the personal and small business loan market.

Buoyed by capital from venture capitalists, fintech companies didn’t need the big banks in the beginning — they saw a path to going it alone, but by early 2017, with less capital available, “Romance was in the air,” says More, who has followed financial technology since 1998.

During fintech’s boom, big banks eyed the nimble, innovative startups with a mix of admiration and envy. Big banks tend to cautiously adopt new technology so they don’t take creative risk nor move with the same speed as startups. That said, big banks are trusted and strong. They have brand recognition, millions of long-term customer relationships, and, it goes without saying, large pools of capital.

A change of heart

As the flow of venture capital slowed, fintech rediscovered the value of partnership. They opened a dialogue with the banking community and sparks began to fly. Fintech found more than just capital; they found millions of customers, vast distribution networks, and deep subject matter expertise. Meanwhile the banks, eager for new customer centric technology and speed, offered a warm reception.

Better together

Several banks are now working hand-in-hand with fintech. As one avenue to engage with entrepreneurs outside Wells Fargo, the bank created the Wells Fargo Startup Accelerator, a non-exclusive, six-month program for early-stage companies. The program is focused on mentoring and helping companies refine their potential breakthrough technologies for financial services and other applications. According to More, the bank sees hundreds of business plans from startups, which helps the bank keep its finger on the pulse of the market and build relationships. Regularly collaborating with startups on a wide range of technologies helps Wells Fargo explore big ideas to shape the future experience for customers.

Wells Fargo is working with Kasisto, part of the inaugural class of the Wells Fargo Startup Accelerator, to integrate their conversational artificial intelligence platform to create a chatbot on Facebook Messenger. The company’s pilot, which launched for up to 5,000 customers and team members earlier this year, was a starting point for Wells Fargo to determine whether AI is a viable way to interact with customers on Messenger and make banking more convenient.

In addition, companies such as Wells Fargo and U.S. Bancorp recently signed deals2 with Blend Labs, a five-year-old home mortgage startup. The banks hope to shorten the mortgage application process so they can deliver a better experience to customers who want the process so simplified, it can be done on a mobile phone.

Here to stay

The new spirit of collaboration and partnership between banks and fintechs is exciting and real. More believes collaboration is in everyone’s best interests — above all, the end customer. “You can debate valuations, but in the end, fintech has made the financial industry better,” he says. “It has raised the bar, and you know who wins … the customer wins.”

For more information, contact your Wells Fargo treasury management representative or fill out the Contact Us form on this site.

1. Venture Scanner https://www.venturescanner.com/blog/tags/fintech
2. Wells Fargo, U.S. Bancorp Turn to Startup to Speed Up Mortgage Applications, Wall Street Journal Aug 24, 2017. http://webreprints.djreprints.com/54106.html