Forbes: Fiserv Launches Accelerator For Global Fintech Startups

Moira Vetter
February 7, 2016

Originally published in Forbes

You can’t swing a stick and not hit an accelerator these days. That’s good and bad for entrepreneurs and business. For startups competing for attention and resources, it may be difficult to tell where they’ll get the most lift.

And lift isn’t defined strictly in dollars. Increasingly the emphasis on domain expertise resources and real world applications (customers) to test ideas on are a greater factor in entrepreneurial acceleration than just capital. Time is money too, and time spent with the right people can equate to better money and better business.

The Bank Innovation INV accelerator from partners Fiserv, Bank Innovation & U.S. Bank

Matt Wilcox, Fiserv’s Senior Vice President of Marketing Strategy & Innovation, is keenly aware of the importance of domain expertise. Working with thousands of financial institutions on financial applications gives Fiserv a front row seat to the business and technology opportunities and challenges for financial institutions. Often, large financial institutions and credit unions don’t have the resources or freedom to innovate at the pace needed to revolutionize their offerings.

That’s where the Bank Innovation INV accelerator comes in. Bank Innovation and Fiserv are launching INV, with the support of U.S. Bank, the 5th largest bank in the U.S. and other partners including Cross River Bank.

Fiserv considers themselves to be the ‘stitching’ between high potential startups and the financial institutions they serve. In this way, Fiserv gets a triple win—they help their financial clients advance, they provide invaluable real-world testing grounds for entrepreneurs, and they benefit from being a true value-added partner.

 

What regulatory realities do fintech startups need to master?

One of the things brilliant techies and entrepreneurs with high EQs need access to is a practical understanding (or an able navigator and translator) for the complex fintech space. Experts can help provide practical guidance around the regulations and business challenges that are the real category killers or creators.

Whether you have advisors or not, some fun weekend reading for entrepreneurs serious about the fintech category include:

  • The Dodd-Frank Act – Enacted in 2009 in response to the economic crisis of 2008, the Dodd–Frank Wall Street Reform and Consumer Protection Act (DFA) built in more protections, alerts and requirements to ensure transparency that will prevent a future ‘crash’ and protect investors and financial institutions from contributing to the behaviors that lead to a ‘crash.’ The DFA impacts IT because many of the alerts and tie-ins with credit systems place a higher cost of compliance and technology management on financial institutions. And while invoking a compliance stick, the Act also removed the carrot of some revenue streams that incentivized FI’s to approve high-risk decisions.

There is an opportunity for fintech providers who can either help FI’s reduce their cost of real-time transaction management or find alternate sources of revenue that are not based on high-risk or potentially system compromising transactions. For a detailed overview of the myriad of data inputs and outputs regulated by Dodd-Frank, you can review this white paper Infosys produced here. The tables on pages 3 and 4 of the report are particularly useful. If you’d like to read all 849 pages of the DFA, you can review this PDF.

  • Consumer Financial Protection Bureau (CFPB) – The creation of the Consumer Financial Protection Bureau introduced greater oversight, and far more complexity for banks and credit unions in handling the bread and butter transactions of our economy like mortages, commercial leases, auto financing and more. For a snapshot into the regulatory requirements on institutions participating in these basic lending activities, take a look at the regulations section of the CFPB website.

 

Drawing global startups into fintech nerve centers

Some incubators focus on one center of domain expertise or one geographic business center, but that’s not the case with the Bank Innovation INV. Entrepreneurs from all over the globe can apply and have an opportunity for exposure to the experts (and the capital) in established fintech hubs including New York, Europe, Israel, Silicon Valley and, Fiserv’s own fintech hot spot, Atlanta.

The support available to entrepreneurs selected to participate in INV include:

  • Consultation with Fiserv technology mentors
  • Direct feedback from financial institutions
  • Specific recommendations on technology, strategy, sales and marketing
  • Beta-testing and/or proof-of-concept opportunities
  • Goal-setting and project management assistance
  • Access to independent legal professionals
  • Access to valuable APIs and banking services
  • Marketing support through Bank Innovation
  • Financial support

 

Why are hands-on fintech accelerators critical to making the business case?

Accelerators are evolving from something the cool kids participate in, to something serious business people activate their businesses in.

Often entrepreneurs have fantastic ideas for ways to innovate payments, connect consumers in new payment realities and streamline financial applications. The challenge is that, in the real world, banks and large financial institutions have regulatory and compliance requirements that prevent them from testing things with their consumer’s data or in their own live environments. Innovation comes from risk, and yet technology and decision risk is the antithesis of the world financial institutions exist in.

Accelerators such as INV, enable risk takers and innovators to be brought into the live environment. Advisors like Fiserv can help startups construct prototypes that respect the laws and requirements that a winning solution must abide by. They can bring the innovators directly to their customers that have opportunities that align with those innovations. A win in this kind of accelerator pulls the entrepreneur through a huge collective of expertise directly into the commercial market. Priceless.