This week was time again for the EXEC conference. It is probably one of the biggest FinTech conferences in Germany and personally my favourite FinTech conference in Germany. This time a little different since it was first time in Berlin and not Frankfurt, and additionally, the conference covered not only FinTech but InsurTech as well.
What was the trending topic? Well, you could say “all the typical things” as known as PSD2, Open Banking, Identity, etc. On top of that there was one more topic that was touched in a couple of presentations and conversations: Building MVPs (Minimum Viable Products) in banking. Valentin from N26 and Peter from SolarisBank touched this topic in their presentations and my very own presentation was all about “Building MVPs in banking”.
You can’t build MVPs in banking, can you?
If you know the concept of MVPs you know it’s all about speed, fast iterations and shaping the product while giving it already to your customers. As it being a concept which has not been around for decades, those people in the banking industry with a rather traditional mindset often find various reasons why the concept of MVPs is not applicable to banking. This industry definitely has some characteristics that make it a little harder to implement the concept of MVPs – but it’s not impossible at all. In the past years, I have seen many newly formed startups that were building their product through MVPs. But what about banks?
Finding the detour
As mentioned before, there are a few settings in banking that make MVP building a little more complicated – regulation and capital requirements being the most important ones. I don’t want to focus too much on the obstacles that can’t be changed but rather on the obstacles that can be overcome somehow.
Personally, I have identified choice of partners, technology and mindset as the three things that any cooperation (but especially banks) could improve, and thus, move more towards the concept of building MVPs.
a. Choice of partners
If you select the same old partners you have ever used, then you probably get the same old results. Period. While partnering with a new kind of companies that embrace technology and new thinking, your cooperation will be able to learn on very different levels. Partnering or working with a FinTech startup in general is a good starting point to learn, however, more is possible. As a banker, I would purposely partner with companies outside of my industry, and more precisely, I would use “contractors” that are also working with big tech companies such as Facebook or Twitter. For example, I would consider using HackerBay for a first MVP instead of building everything in house. If you are afraid of tech companies entering your space, why not using the same providers to gain easily insights in their way of operating? Leave your bubble.
Very often legacy technology is being used as the argument for not being able to innovate or build a new product. But this argument shouldn’t have any impact anymore. Currently, there are more APIs available in banking than ever and there is no reason why a new MVP has to be build on top of own technology. Banks using figo as a way to test new ideas outside of their own infrastructure is probably the best example for finding a way around this obstacle.
Probably the biggest issue, but also the hardest to tackle. Building MVPs goes hand in hand with accepting failure. At many points of the MVP process, there will be “failures” and learning the most of them is very crucial. In general it is more important to understand the reasons for being right or wrong that being right in the first place. However, implementing the mindset of “failure culture” is one of the biggest challenges for incumbents – not just for banks. There is no general roadmap for how to get there, however, personally I am big fan of internal fuckup nights as the very first baby step. Overall a concept of “dealing with failure better” needs to be developed which has to touch many areas, however, having such fuckup nights with active support and involvement of the management, could be a good first step to start this development.
All in all, building MVPs in banking is not impossible. There is no golden roadmap, but a few points that can help any cooperation to build better products. Identifying the holdbacks and find a way around them is the way to go – not just for choice of partners, technology and mindset.