Technology Banking
finance | 2 minute read

Fintech and banks: The new power couple?

In the years leading up to 2016, investors have had a love affair with fintech. In 2016, an astronomical $19 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.”

Disclosures
  1. Source: 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

Insights

Growth
Innovation
Risk
Finance
Perspective
« Return Home

How can we help you grow?

A broader perspective can help you build a better future for your business. Let's explore more angles today.

All fields are required unless labeled "optional".

We look forward to speaking with you.

Thank you for your interest. We'll contact you shortly to learn more about your business needs and discuss how we can help you reach your financial goals.

Disclosures

Securities Products:

Not Insured by FDIC or any Federal Government Agency

May Lose Value

Not a Deposit of or Guaranteed by a Bank or Any Bank Affiliate

©2017 Wells Fargo Bank, N.A. All rights reserved. Member FDIC. Deposits held in non-U.S. branches are not FDIC insured.

Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including but not limited to Wells Fargo Securities, LLC, a member of NYSE, FINRA, NFA and SIPC, Wells Fargo Prime Services, LLC, a member of FINRA, NFA and SIPC, and Wells Fargo Bank, N.A. Wells Fargo Securities, LLC and Wells Fargo Prime Services, LLC are distinct entities from affiliated banks and thrifts.

© 2017 Wells Fargo Capital Finance. All rights reserved. Products and services require credit approval. Wells Fargo Capital Finance is the trade name for certain asset-based lending services, senior secured lending services, accounts receivable and purchase order finance services, and channel finance services of Wells Fargo & Company and its subsidiaries. Wells Fargo Capital Finance Corporation Canada (also doing business in Quebec as Société de financement Wells Fargo Capital Canada) is an affiliate of Wells Fargo & Company, a company that is not regulated in Canada as a financial institution, a bank holding company or an insurance holding company. Wells Fargo Commercial Distribution Finance is the trade name for certain inventory financing (floor planning) services of Wells Fargo & Company and its subsidiaries.

Wells Fargo & Company conducts business outside the U.S. through various companies, including duly authorized and regulated subsidiaries and affiliates in Asia, Canada, and Latin America. In Europe, banking services are provided through Wells Fargo Bank International (WFBI), directly regulated by the Central Bank of Ireland, and Wells Fargo Bank, N.A. London Branch, authorized by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA. All products and services may not be available in all countries. Each situation needs to be evaluated individually and is subject to local regulatory requirements.

We provide links to external websites for convenience. Wells Fargo does not endorse and is not responsible for their content, links, privacy or securities policies.

Important notice regarding use of cookies: By continuing to use this site, you agree to our use of cookies as described in our Digital Privacy and Cookies Policy.

The opinions expressed in this document are general in nature and not intended to provide specific advice or recommendations for any individual or association. Contact your banker, attorney, accountant or tax advisor with regard to your individual situation. The opinions of the author do not necessarily reflect those of Wells Fargo Capital Finance or any other Wells Fargo entity.

The information in this report is for educational purposes only and should not be used or construed as financial advice or a recommendation to participate any strategy mentioned herein. Wells Fargo does not guarantee that the information supplied is complete, undertake to advise you of any change in its opinion, or make any guarantees of future results obtained from its use. The concepts discussed in the paper require the assistance of qualified legal counsel and tax advisors, and investors should consult their own attorneys and tax advisors with respect to their own situations.

  1. Silicon Valley Top 150 2017 Silicon Valley Top 150 Public Technology Companies Rankings by Annual Revenue

Disclosures

Securities Products:

Not Insured by FDIC or any Federal Government Agency

May Lose Value

Not a Deposit of or Guaranteed by a Bank or Any Bank Affiliate

©2017 Wells Fargo Bank, N.A. All rights reserved. Member FDIC. Deposits held in non-U.S. branches are not FDIC insured.

Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including but not limited to Wells Fargo Securities, LLC, a member of NYSE, FINRA, NFA and SIPC, Wells Fargo Prime Services, LLC, a member of FINRA, NFA and SIPC, and Wells Fargo Bank, N.A. Wells Fargo Securities, LLC and Wells Fargo Prime Services, LLC are distinct entities from affiliated banks and thrifts.

© 2017 Wells Fargo Capital Finance. All rights reserved. Products and services require credit approval. Wells Fargo Capital Finance is the trade name for certain asset-based lending services, senior secured lending services, accounts receivable and purchase order finance services, and channel finance services of Wells Fargo & Company and its subsidiaries. Wells Fargo Capital Finance Corporation Canada (also doing business in Quebec as Société de financement Wells Fargo Capital Canada) is an affiliate of Wells Fargo & Company, a company that is not regulated in Canada as a financial institution, a bank holding company or an insurance holding company. Wells Fargo Commercial Distribution Finance is the trade name for certain inventory financing (floor planning) services of Wells Fargo & Company and its subsidiaries.

Wells Fargo & Company conducts business outside the U.S. through various companies, including duly authorized and regulated subsidiaries and affiliates in Asia, Canada, and Latin America. In Europe, banking services are provided through Wells Fargo Bank International (WFBI), directly regulated by the Central Bank of Ireland, and Wells Fargo Bank, N.A. London Branch, authorized by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA. All products and services may not be available in all countries. Each situation needs to be evaluated individually and is subject to local regulatory requirements.

We provide links to external websites for convenience. Wells Fargo does not endorse and is not responsible for their content, links, privacy or securities policies.

Important notice regarding use of cookies: By continuing to use this site, you agree to our use of cookies as described in our Digital Privacy and Cookies Policy.

The opinions expressed in this document are general in nature and not intended to provide specific advice or recommendations for any individual or association. Contact your banker, attorney, accountant or tax advisor with regard to your individual situation. The opinions of the author do not necessarily reflect those of Wells Fargo Capital Finance or any other Wells Fargo entity.

The information in this report is for educational purposes only and should not be used or construed as financial advice or a recommendation to participate any strategy mentioned herein. Wells Fargo does not guarantee that the information supplied is complete, undertake to advise you of any change in its opinion, or make any guarantees of future results obtained from its use. The concepts discussed in the paper require the assistance of qualified legal counsel and tax advisors, and investors should consult their own attorneys and tax advisors with respect to their own situations.

  1. 2017 Silicon Valley Top 150 Public Technology Companies Rankings by Annual Revenue.