Throughout 2019, banks continued to partner with startups in their efforts to build multi-service platform offerings.

These relationships have been necessary to help institutions evolve their distribution models and enable startups to develop product offerings that meet customer expectations.

BMO Financial Group‘s Ben Schack, who leads the bank’s U.S. digital partnerships team in Chicago, is responsible for sourcing bank-fintech partnerships through the BMO Harris Bank 1871 Innnovation Program. BMO is also a member of Bank Innovation‘s sister accelerator, INV Fintech. Schack argues that fintech companies will continue to build out their ecosystems of offerings to enhance customer relationships.

Bank Innovation spoke with Schack on his reflections on bank-fintech partnerships in 2019, and trends that are likely to take shape in 2020. Answers have been edited for clarity.

How can investors tell that an idea has the potential to be successful?
The big questions are “has a company identified a problem that is is really worth solving? Is there a willingness to pay to solve that problem, either on the consumer side or the institutional side or in between?” They’re probably not new, but still fundamental and a big litmus test.

Which trend stood out to you in 2019?
The biggest trend that I really observed throughout 2019 is the bundling of financial services.

I thought that was the headline last year. Are you suggesting it’s still relevant?
When the fintech revolution started, many companies were using technology to solve one problem and solve it really well. 2019 was the year when other financial products started to be added into those experiences. It feels like every robo-adviser has a savings account. More of the fintechs are starting to bring in broad products to be able to solve multiple financial needs for a customer. 

See also: Varo’s de los Reyes on building inclusive user design

How about personal finance? What did you observe in that space?
In the personal finance space, everybody’s trying to deliver insights to customers that are unique and valuable for the customer. Companies who win are going to be the ones who can gain customers’ trust. That way, the customer knows that the insights are accurate, and that they are delivered with the customers’ best interests in mind. 

Is there a place for startups to cater to the so-called underserved market of consumers?
Banks are actually doing a lot to serve all markets and all types of consumers to the extent possible. Banks often receive a bad rap for not helping underserved populations gain access to the financial system. But it’s fair to say that more fintech players are focused on that space.

The obstacle for banks is risk. Large U.S. banks have been built on a foundation of solid risk management and that permeates everything from management to strategy. Having a different risk philosophy is really helpful when you’re trying to serve underserved communities.

What’s the biggest mistake that entrepreneurs and newer companies make when pitching BMO?
In the early days, there were probably more opportunities to pitch investors than there were customers. A pitfall is remembering that customers and partners have a fundamentally different set of things that they care about when evaluating an new company. A potential buyer may have a different set of things on their list.

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