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Groundbreaking fintech onboarding guidelines created with UK’s five biggest banks

Fintech, Early Stage, Late Stage, Mid Stage

Greg MichelGreg Michel, November 7, 2018

We are delighted to announce that Tech Nation’s Fintech Delivery Panel, in association with the British Standards Institution (BSI) has today launched new guidance to improve engagement between fintech companies and financial institutions. In an international first, these guidelines aim to accelerate fintech growth and reinforce the UK’s place as a global centre of innovation in financial services.

John Glen MP, Economic Secretary to the Treasury said: “The UK is a trailblazer in fintech, but to be the best in the world we need to make it as easy as possible for newcomers to collaborate with the bigger players. That’s why we helped to set up the Fintech Delivery Panel, and thanks to the guidelines published today the industry will be able to work closer together, benefiting customers across the country.”

View the fintech onboarding guidelines >

Seizing momentum

Financial institutions expect an 82% increase in partnerships with fintech companies within the next three years, demonstrating a clear increase in appetite for collaboration. Investment in British fintechs remains high, with the £12.2bn invested in the first half of 2018 representing over half of that invested across Europe, and more than a fifth of that invested globally. All of this illustrates the importance of fintech and its integration into the wider financial sector – a process that the guide aims to ease.

The document has been jointly created by the UK’s top retail banks (Royal Bank of Scotland, Barclays, HSBC UK, Lloyds Banking Group, and Santander) sitting on the Fintech Delivery Panel. Leading fintechs, such as MarketInvoice, The ID Co., and iwoca, also contributed to developing the guidelines, with all parties coming together to identify and address the issues that prevent fintechs and financial institutions from becoming successful allies.

Collaboration is king

The Publicly Available Specification – PAS 201:2018 Supporting fintechs in engaging with financial institutions guide – seeks to set the UK apart by clarifying the process for fintech companies and financial institutions alike. The PAS aims to reduce time, cost and risk for all parties. Crucially, it will be freely available not only to the 1,600 fintech companies currently operating in the UK  but also to those international fintech companies wanting to engage with UK-based financial institutions, and any other SME looking to work with large financial institutions.

The PAS contains numerous pointers that the banks hope would be helpful for companies to bear in mind such as:

  1. Communicate as clearly as possible what problem you’ve identified, and exactly how your product provides a solution to it
  2. Relying on a problem and solution solely is often not enough – institutions want to understand the longer-term market opportunity, and want to know the firm they engage with understand it too, to make sure any investment is truly worthwhile
  3. If your goal is to partner or collaborate with a financial institution, tweak your pitch to represent this fact rather than using your customer-facing pitch.
  4. Keep an eye on the future to ensure potential partners understand the long-term relevance of your solution

Dan Palmer, Head of Manufacturing and Services at BSI, said: “It is vital that we make it easier for fintech companies to engage with established banks. Not only will this collaboration improve services for customers, but it will also ensure that the UK remains at the forefront of the financial sector. These guidelines should facilitate these engagements, allowing fintechs to navigate the choppy waters of the pitch process with relative ease.”

The guide also provides an explanation of both the commercial considerations and the necessary checks and controls that need to be satisfied to meet business and regulatory demands.  This includes recommendations on preparation, data gathering, due-diligence, onboarding, commercial and contractual processes, as well as data protection and information security considerations.

Leading by example

Anil Stocker, CEO and co-founder at MarketInvoice, said: “In August this year, we partnered with one of the sponsoring banks in an industry-first collaboration to give their business banking customers access to our invoice finance solutions. We took a number of learnings during the creation of this PAS to help marshal our relationship with our partners. There is a lot of guidance that can really help young fintechs. For me, culture is key. Both parties need to know and agree on a central mission in partnering. In our case, it was always about ensuring the highest level of customer service in helping UK businesses.”

The aim of the Fintech Delivery Panel’s working group is to facilitate the interactions between banks and fintech companies as much as possible. It is our firm hope that other banks in the UK and abroad will follow suit and also adopt the guidelines released today. For the next iteration of the guidelines, though, we will be working on a toolkit containing more resources for entrepreneurs. So this is just the first step, albeit, a world-leading one.