Banks increasingly scout emerging technologies through their own innovation programs. Just last week, Truist announced the launch of its new venture investing arm and BNY Mellon announced a new accelerator program.

“Truist Ventures has the privilege of being one of the windows to the outside,” said Vanessa Indriolo Vreeland, head of Truist Ventures. “We’re always looking to achieve the right risk-adjusted return, but that’s really not the primary objective of the program.”

As banks continue to face rapid transformation, many are looking outside their own walls to discover new technologies through startups, often catering to them through mentorship programs or investments. It’s a strategy used by other incumbent banks like PNC and Citibank.

Vreeland joined the Charlotte-based Truist, the result of the December 2019 merger of SunTrust and BB&T, in January and has been building the team while refining Truist Ventures’ strategy. She said payments, data and client experience will be some key focus areas for the venture program, but the bank is also interested in solutions that extend beyond traditional financial services. For example, Truist is looking at companies that could help customers move when they buy a new house, making the bank a more trusted advisor than simply a mortgage source. Truist Ventures fall under the purview of Chief Digital and Client Experience Officer Donta Wilson.

According to Vreeland, the Truist Ventures team meets with business leaders at the $504 billion-asset bank regularly to find out what is important to them during the following 12 to 36 months. “My team is invited to strategic initiative conversations,” she said. “Very little of what we do will be, ‘Wow, this is an exceptional shiny new object. Let’s invest in it.’” Truist’s portfolio companies include Greenlight, Payrailz and Finxact. The company also announced last week a new investment in Veem, a company that helps businesses send and receive money internationally.

Simon Taylor, head of ventures at the fintech consultancy 11:FS, said there are a variety of paths banks can take to incubate new ideas. The key, he said, is understanding the end goal. “Banks need to distinguish between new products that enhance their existing business model versus ventures that help them grow sustainable and long-term shareholder value,” Simon said.

BNY Mellon’s new accelerator program, meanwhile, is designed to accelerate companies that can help the $442 billion-asset bank’s clients across all business lines. Hans Brown, head of enterprise innovation and chief information officer for corporate technology, said the bank has an enterprise digital council that has representation from all businesses within the bank to ensure BNY focuses on technologies that will help the bank and clients. By keeping the problem and desired outcome in mind, Brown said the accelerator can truly add value. BNY, which specializes in investing and wealth management, is targeting startups that already have a tangible product. The bank has $2 trillion in assets under management.

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The accelerator program falls under Roman Regelman, CEO of asset servicing and head of digital at BNY Mellon. Brown said companies that go through the accelerator will likely have a relationship with the bank afterward. As part of the accelerator, BNY is hosting the BNY Mellon Connect20 Challenge, a virtual “hackathon” that allows startups to address real-world problems around data extraction, anti-money laundering and know-your-customer processes, and AI-powered solutions. The winner, announced later this year, will earn a place in the inaugural accelerator class.

“For an early-stage company, being sure you’re solving the right problem and having access to a level of expertise and depth that we have by virtue of our size and scale can be the difference,” Brown said.

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