Reported by: banking|Updated: November 24, 2017
It is evident that our society is in a transition phase where more and more wealth creators think of themselves as entrepreneurs rather than businessmen. There is a major difference between both the categories. In business, the emphasis is on scaling up through continuity of proven strategies, whereas in entrepreneurship the focus is on scaling up through continuity of new ideas.
Exponential growth of several companies like Flipkart, Ola, Makemytrip, etc, has had a major influence on youngsters. Many youngsters, particularly those who are studying in leading educational institutes, actually prefer to be start-up entrepreneurs rather than employees at prestigious corporations.
I was interacting with some fintech start-up entrepreneurs and got the impression that they know much more about the business of various VCs than they do about the business of leading banks. Clearly, they do not attach much importance to banks. However, they did seem to be fairly aware of their digital offerings…which was in line with their own business prospects.
Another interesting insight was that these start-ups as well as the VCs are only looking at a short-term engagement. Neither side wants long term entanglement with the other. Both are looking forward to exit the relationship…in fact exit is the foundation of the relationship. Paraphrasing a popular quote: “Together in profit and loss, till exit does us apart.”
Banks, while not top of mind for these youngsters, have a long-term engagement plan which might still give them a decent share of wallet. Fintechs themselves will need a variety of financial services and that will keep expanding as the fintech grows. That is when both banks and fintechs will get to know each other better.
That is why I say, VC-fintech partnership is like dating, and bank-fintech partnership is like marriage. It is actually a winning proposition for all three!