Should incumbents who dominate sectors like banking, payments, legal and ecommerce develop their own tech in-house to protect market share and grow? Or, should they collaborate with startups, who bring something new, usually by focusing on a vertical or by doubling down on expertise around a specific technology?
For a company that’s dominated a sector for years, perhaps even decades, collaboration can feel like the harder choice. A slow-moving giant has budget and leverage, in terms of brand value, customer base and resources. But they also have a lot to lose. Startups can look like a risk, so it would be easy for them to assume a safe route to progress and build from within.
But, over the last few years, disruptive startups have matured into developed companies who offer genuine solutions through highly targeted products to a huge number of customers. Incumbents are learning that the quickest way to gain access to new technology and push their brand and services to younger, more engaged audiences is by entering into partnerships with these scaleups. Fintechs are no longer rebellious upstarts. They are now partners and friends.
That’s why Transferwise partnered with BPCE Groupe, France’s second largest bank. And it’s why Goldman Sachs invested in 37 fintech startups. J.P. Morgan CEO, Jamie Dimon, summed up the incumbent’s viewpoint pretty succinctly in 2015 when he said: “There is stuff we don’t want to do or can’t do, but now more than ever there is somebody else who can do it - and probably well. In order to take advantage of that, there has to be collaboration.”
The benefits of collaboration are even more keenly felt in areas where specialised technologies can’t easily be built within the confines of the incumbents’ existing business framework. Future technologies, like AI and blockchain, are being developed by highly specialised teams of experts. It’s easier for organisations with budget to buy into the end-product, rather than spending years and millions hiring, training, developing and building in-house.
Our partnership with Visa is testament to this trend. In partnering with a scaleup like Shieldpay, Visa expects to unleash the power of new technology, betting that collaboration will give them an edge over competitors who might not be moving as quickly. And we’re acutely aware of the benefits we’ll gain from partnering with a company of Visa’s history, size and reach too.
The partnership will allow us to work with Visa’s CyberSource platform, giving access to new verticals where secure peer-to-peer payments have been tough in the past, such as classified platforms and peer-to peer-marketplaces. It will also allow Shieldpay’s partners to make use of the Visa Direct push payments service.
And that’s a crucial point - great and long standing partnerships are always two-way. They involve an exchange. We both leverage the best of our business in order to help the other. Startups and scaleups bring ideas and a fresh understanding of new platforms, channels and customer bases. Incumbents help us to serve an ever-growing customer base, whilst sharing relationships and skills they’ve gained from their years at the top.
Our partnership is clearly part of a wider trend. There is a mountain of evidence showing how incumbents are turning to fintechs in order to help them thrive in the digital era. A 2018 Capgemini surveyfound that 91% of bank executives said they would like to work with fintechs, and 86% were concerned that a lack of collaboration will hurt their business.
Our partnership is the latest reason to believe that the future of the payments market is being shaped by new entrants, like Shieldpay. Visa clearly recognised that. As with all great partnerships, the trick is to target progress in unison. Together, we win.
Shieldpay protects both buyer and seller in any transaction so that you can deal with anyone, anywhere with total confidence.
How do we do it? We verify the identity of both sides, funds are held securely in the Shieldpay vault and only released when both sides agree they’re happy. If anything doesn’t go to plan, we help out with any disputes!
Find out more about Shieldpay, or let us know your thoughts by leaving us a comment or chatting to us on Twitter, we'd love to hear from you!