It’s clear that fintech startups are not going away — there are more of them all the time. (And here are five more.) What’s not clear is how they are getting along with banks.

The number of publicly announced substantial partnerships is vanishingly small. Startups are getting fed up with banks’ hurdles and long sales cycles, and are starting to direct their sales efforts at other enterprises.

Part of why banks and startups may not be connecting effectively is asymmetry of information. Banks aren’t always upfront with potential fintech partners about what they expect from a proof-of-concept or a pilot — and attaining any sort of an arrangement with banks is the fondest wish of many a startup.

“There’s an ambiguity in what banks on one side, and fintech companies on the other expect from a POC,” Bruce Wallace, CTO of Silicon Valley Bank, told Bank Innovation. “Fintech companies expect the bank will be an enterprise client, while for the banks it’s often more around R&D, product learning, testing. Talk to companies about how frequently they do POCs that never end up with an enterprise license.”

Bruce spoke on this theme at Bank Innovation 2017 in San Jose:

But even a licensing deal falls short of what bank-fintech collaboration could be, Wallace said.

“The incredibly valuable aspect banks have for fintech companies is portfolio of consumers and businesses — it’s enticing,” Wallace said. “To fintech companies, unfortunately, the model where the FI is a real channel partner, there are not many examples of those. There are plenty of examples of buying licenses, then whitelabelling the product, rather than being a true channel partner – so [the startup’s] brand will be out there front and center.”

The ultimate channel partner in Wallace’s view (he apologized for the obviousness of it) is Apple and the App Store. “The App Store model is a win-win for both parties,” Wallace said. “It’s a toolkit, a place where you can take for granted interoperability.”

There should be a clear delineation between licensing and being a channel partner, Wallace said, putting forward a view of fintech business development strategy that runs somewhat against the grain: “Fintech 1.0, for lack of a better term, was about building and selling direct to the financial services industry,” he said. “Fintech 2.0 is more about going direct to business and consumers.”

The Bank That Builds a One-Click Marketplace Will Win

Another area where banks need to improve their game is in managing customer data, Wallace said.

“Banks are the custodians of important customer data and information, and need to take security seriously,” he said. “Most consumers would agree that the fundamental principle of banks to take security seriously is a good philosophical position. But we don’t want to block access to data, even with consumer consent.”

But blocking access to customer data is just what many banks want to do, as the CFPB noted in November.

“That data is my data, not their data,” Wallace said, speaking as a bank customer. “I can access my account and history and documents. I should have complete authorization and access, if I want to get products and services. Banks need to try and find out how to do that, to reconcile those two things.”

Part of this is the thorny problem of digital identity — a secure and portable way for customers to transact across the digital world. Will banks help bring this about, as Vinny Lingham of Civic has hinted?

“My guess on how it will unfold is that we will get to a digital identity that can be repurposed, but it will not come from a financial institution,” Wallace said. “An innovation or tech company will figure out a method to monetize around that, and make the consumer experience seamless and easy.”

A certain mega-retailer in Seattle does this well, even managing an identity across multiple marketplaces, and increasingly, multiple sites. “I’d compare it to Amazon – when I want to buy something, I can do it with one click,” Wallace said. “They are that trusted platform in this situation. You can price and compare, but still buy with a single click. Can someone create that Amazon experience?”

A one-click marketplace, combining the best of Apple and Amazon, could be a differentiator, Wallace said, even in the sticky world of digital banking.

“Some banks will do it better, the one-click process, spend the time to reimagine what the consumer experience should be like for their own and other banks’ customers,” he added. “It’s not about defending the castle, it’s how should we leverage this technology and make it easy for banks to better sell and get deeper walletshare.”

Amazon and Apple set quite a high bar, but Wallace is optimistic about banks eventually reaching these lofty goals.

“It will come in chunks and pieces, not tomorrow,” he said. “It’s a pretty radical shift to the model. It will take time, five to 10 years from now.”