Startup & Bank Collaboration

Collaboration to Make Innovation Work: A Conversation with Tracy Lagasse of Fintech Growth Syndicate

In Insights, News by Carta Worldwide

A master connector tells us what is possible in fintech when banks and startups stop competing and start collaborating.

Where banks and fintechs were once in an innovation race, they are now seeing ways to collaborate for greater gains. But bringing together large incumbents and scrappy startups is a complex process—with diverse priorities and often-conflicting processes at play. That’s where the Fintech Growth Syndicate steps in. Co-founder and Managing Partner Tracy Lagasse talked to Carta about the cross-pollination that is happening between these groups and across borders.

Along with Growth Syndicate CEO Sue Britton, Lagasse is hosting the “FemTech” panel at Mobey Day 2017. Join them on August 30–31 and read on for a sneak peek of what we’ll explore with them at Mobey Day:

Carta Worldwide: What’s unique about what the Fintech Growth Syndicate is doing?

Tracy Lagasse: We operate at the intersection of sales and innovation—so we serve both the corporate incumbent side of banking and the fintech startup side. Sue and I each have more than 20 years’ experience in large corporate banks and large tech companies. Our entire history was trying to innovate with them—listening to client needs, creating new products, bringing new products to market. Over time that translated into running internal innovation programs which means we have a deep understanding of how to innovate within a corporation and the challenges that come along with that.

Now we help banks and corporations develop their innovation framework and strategies. The market is trending towards partnership and not doing everything in house. The value we bring to the table is a foot firmly in the world of fintech startups. We know who they are and how to engage with them to make it work.

Carta: How can fintechs and corporate incumbents benefit from one another?

Tracy: If you’re a large corporation and you want to figure out how to bring a new product to market—it sometimes involves creating a new innovation process or engaging with a smaller fintech start-up—we know how to identify who those people are, how to bring them to the table. The cultures at these small startups are different, and the needs and processes are different. We translate the needs of a big corporation to a small startup, and the needs of a small startup to a big corporation.

Startups need to figure out how to grow their revenues by accessing distribution channels. They need to figure out their value proposition, who is their target market and which market is going to give them the biggest return. With startups sometimes we’re introducing them to an incumbent that’s a good fit for sales and distribution channels, and sometimes we’re helping them move outside of Canada.

Carta: Have you had any challenges as female leaders in the fintech space?

Tracy: The fintech community itself has a huge desire to collaborate and support one another. And actually the larger companies—which aren’t always known for being that way—have been very supportive of women-led companies in this space. But there are still a number of challenges that women face in fintech.

For example, a recent HBR study looked at funding for women-led companies and how the questions VCs ask these leaders are biased. [ed’s note: the study found that VCs are more likely to focus on prevention and the risk of failure when talking to women; whereas with men they are more likely to talk about promotion and potential for success.] A well-known economist in the US did research that showed how many women are going to venture capital, and how much funding they receive versus men. It reveals some systematic biases.

Carta: What do women uniquely bring to the fintech space?

Tracy: Because we have different needs we identify different problems to solve and we then also approach problem solving from a different angle. There’s a different approach to things like collaboration, or how to partner or compromise. Women often seek a win-win outcome. We have a natural bias to start from a perspective of collaboration, which is sometimes an advantage.

Carta: What challenges do women in fintech face that men may not deal with?

Tracy: It’s not always overt, but you see it in the outcomes: for example at conferences, panels often the skew towards men. In an innovation roundtable there might be one woman out of 20 participants. There’s an incredible number of women in fintech—the numbers are there but getting women into the predominant positions, we’re just not seeing that.

Carta: The theme of this year’s Mobey Day is cross-pollination and how it’s fuelling innovation. In a way, this is really what you’re doing: facilitating cross-pollination between fintechs and corporations. How are you seeing that play out?

Tracy: For banks that are trying to innovate, that approach is not unusual anymore—you’re seeing banks seeking external partnerships. Some banks are building digital labs internally, but mostly we’re seeing an appetite in banks to engage the external fintech community. There used to be  a theory that banks were threatened by fintechs and [fintechs] would be the demise of their business. Banks are now viewing that differently and instead figuring out what are the right models for collaboration.

Carta: What prompted shift in banks’ mindsets?

Tracy: I think there’s an awareness that throughout the world there are higher and higher levels of adoption of fintech. Consumers used to only trust banks for certain things but that has changed.

Granted, Canada is still low on adoption compared to our global peers, like the Nordics or Asia. But Canadian customers are evolving, and if banks are going to maintain their relevance, they have to own the customer relationship in a different way—by meeting their needs through these partnerships.

Carta: How has international cross-pollination benefited your clients?

Tracy: We’ve been able to help a few startups gain access to clients across the border. It does nothing but help businesses—they tap into market that’s far bigger and faster to revenue.

The distribution models and the nature of the industries are very different in Canada and the US. In Canada there’s a small number of large banks that own over 80% of client relationships. Where in the US you have over 10,000 financial institutions. In the US you actually have the ability to do strategic partnerships with providers to that market. You have the ability to develop relationships with various analyst firms that have influence.

In Canada you only have a handful of customers to sell to and the sales cycles can be long and draining on your resources. So the the US market offers the opportunity to move more quickly, prove concepts out and get to revenue faster.

Lagasse and her co-founder Sue Britton will be leading the Femtech panel at this month’s Mobey Forum. Join them and other international fintech leaders in Toronto, August 30–31, 2017. Register online today.