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Wells Fargo has joined a handful of banks running accelerator programs designed to nurture young fintech companies, foster new ideas and help financial institutions stay relevant in a digital age.
August 20 -
Barclays announced Monday a partnership with Techstars to launch a three-month accelerator program in the UK next year.
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The personal financial management platform has been grooming select early-stage companies for 16 months. Now, its providing more services to entrepreneurs through its incubator program.
August 26 -
Bank Leumi will host tech entrepreneurs from its home country for a month-long mentoring program in New York, joining other banks in soliciting new digital ideas from outside their organizations.
August 16 -
Young companies showed well-thought-out, highly relevant products to a standing-room-only audience of bankers at the FinTech Innovation Lab this week in New York.
July 12 -
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April 29
Wells Fargo is trying to position itself as a patron of fintech startups at a time when banks worldwide are struggling to keep up with the pace of technological advancements.
Like a few other banks with
Rather, Wells Fargo is looking for more intangible benefits a way to meet technologists and cultivate relationships with entrepreneurs who have created or are creating technologies that could be applied inside the bank eventually.
"The structure of the program is not focused on return," said Steve Ellis, an executive vice president and group head of wholesale services at Wells Fargo. Soaking in innovation is what resonated with the "top of the house" to green-light the project.
Wells Fargo joins a small but growing list of financial institutions that have created formal programs designed to discover new ideas.
Some, like
Wells Fargo says the accelerator helps it carve out a space to support innovation, find companies it might not have found otherwise and potentially quicken how it reacts to emerging technologies.
"The faster you drive at night, the brighter the high beam you want," said Braden More, senior vice president of enterprise payment strategy for Wells. "Banking has a big opportunity to improve on how to serve customers and how we innovate."
Wells Fargo's boot camp for fintech startups is meant to work like an internship. Entrepreneurs trying to break into financial services will receive $50,000 to $500,000, and more importantly, guidance from a 162-year-old company that can school them on how to commercialize their products. This may be helpful in an industry with a litany of obstacles like stifling regulations, archaic technology and siloed business lines.
"It's difficult and daunting," More said. "What we offer is the opportunity to be collaborative and not judgmental in the first vendor meeting."
In exchange, the bank potentially forges stronger connections with the tech community and introductions it might not have come across otherwise. (Already, a company based in Ireland has applied for the program through its new website.)
Bankers are recognizing that in areas like software, good ideas could just as easily come from a garage as a corporate R&D department.
"The reason to do something like this has to do with experimenting," said Kosta Peric, deputy director of financial services for the poor at Bill & Melinda Gates Foundation. "Experimenting, of course, involves risk and investment."
Banks have to work with startups to truly understand emerging technologies and determine they have a place in their corporations, said Peric, who used to run an innovation event for Swift.
"Big changes driven by technology are happening," said Peric. "You can't understand it by [reading] papers."
By putting people together who may not normally meet, Peric said, "things happen. Products get used. Startups get acquired."
Sam Maule, manager at Carlisle and Gallagher Consulting Group, sees these initiatives as a way to compete with the likes of Google and PayPal.
"I think accelerator programs are now a lot like remote deposit capture," in that they are table stakes for large banks, he said.
The perennial challenge with innovating in financial services is whether a startup vendor can survive long enough for a bank to make a purchase decision, regardless of the technology's potential, said Vincent Turner, founder of startup Planwise.
"If the bank can combine an accelerator program with actually fast-tracking some decision making by the bank to use the product/service in their own environment, then they are adding a huge amount of value," Turner, who runs a fintech Meetup in San Francisco, said by email.