During my trip to Mexico, I had the opportunity to visit some innovation spaces opened by banks. Several banks praise the collaboration with fintechs and that’s why they decided to dedicate specific areas to work together.
BBVA is considered as the friendliest bank with fintechs and one example of this close relationship is the opening of several Innovation Centers in the world starting by Madrid in 2011. In Madrid, the BBVA Innovation Center has an area named “the Living Labs” where the bank presents its most innovative products to the public. The building organizes events related to new technologies, fintechs and entrepreneurship, these ones opened to everybody. Beside, the innovation teams of the bank do also work in this place. Being in Mexico, I went to the BBVA Bancomer building in Mexico DF, to visit the “Piso 33”, or “Floor 33th” the innovation center of Mexico. This floor was opened in January 2016 to follow the innovation models of the other BBVA subsidiaries. Several events are organized with fintechs and entrepreneurs. The space is inside the headquarter of the bank allowing the employees to attend the events or workshops at any time. I was there the day before the final of the Latin American Open Talent, and I could see the commitment of the international and local executives of the bank to know better the fintechs. This type of interaction brings more empathy and learnings for both sides.
Banregio Bank, a Mexican regional bank, with focus on services for small and medium-sized companies had also inaugurated a “laboratory” to interact with startups. The goal of the bank is to define a new way to work and provide new products that can involve startups, the small and medium sized companies and the bank. Banregio Labs wants to connect the startup ecosystem with the financial services industry offering a space to work for the startups, training and connections.
In August 2016, Gentera opened an innovation lab to interact with fintechs. Gentera is the group behind Compartamos Bank, the largest microfinance bank in Latin America. Fiinlab, the name of the lab, intends to incubate fintechs and work with all the actors of the ecosystem in one place. The space is in the same building of the headquarter therefore constant interaction with the employees of the bank is encouraged too. Being a group that believes and promotes financial inclusion, Fiinlab’mission is to find and share new innovation business models that mixed with technology can create impact on society.
When comparing with Brazil, I realized that financiaI institutions that bet on physical spaces to interact with fintechs took a different approach.
Itau Bank and Redpoint Eventures inaugurated a building of five floors, named CUBO to be close to the startups. The building is a coworking space for startups, not only fintechs. Several events are organized at the building to promote innovation and entrepreneurship. Some other companies as Saint Gobain, Accenture, Mastercard among others did a partnership with CUBO to approach the startups that work there. As any resident of a coworking space, the startup pays a monthly rent at the CUBO. The building is far from the headquarter. CUBO has become a reference point for the Brazilian entrepreneurship gathering several members of the ecosystem in one place.
The insurance sector is also betting on innovation spaces. Porto Seguro, the biggest insurance company of Brazil created an accelerator program named Oxigenio. To accelerate these startups (somehow related to the insurance market), Porto Seguro built an exclusive area for them to work. The residents of the building share the space with employees of Porto Seguro that are opening a startup. To transform the area in an innovation spot, several events about entrepreneurship and innovation are organized to for the general public.
In fact, there is no a unique winning shot to be the best in innovation and that’s why banks try several alternatives to test which will be the best way to learn, to breathe and to swallow innovation. It is interesting the different models that we have in Latin America and as any “startup project” , these models should pivot and bring more innovative structures in the future.
Do banks earn money with these initiatives? It is not evident because they cannot measure if there is an additional revenue coming directly from these projects. However, they set KPIs about the impact that they are creating in the fintech environment (for example number of startups incubated, additional investments during the period of incubation, new partnerships …). In other words, the return of these investments (dedicated buildings, organizing events..) is taken by the entrepreneurs and the fintech environment. These initiatives boost opportunities for Fintechs to do networking, to meet investors, to create partnerships and find new clients.
Banks, you are doing more than collaborating, you are putting the bricks and reinforcing the columns of the fintech ecosystem…that’s why the bank-fintech relationship is more than complicated.