Between virtual reality headsets and meta-universe presentations, we also talked about payouts and insurance at VivaTech booths from June 15 to 18, 2022, where big banks were present to praise the virtues of their young shoots and watch the competition. .
About twenty small cluster stands, in particular, represent Village Crédit Agricole, its network of incubators in France, with four of its FinTech startups specializing in financial services or insurance. “Members of Crédit Agricole watch: when they see a potential partner passing by, they connect us” rejoices Charles-Henri Allonkle, co-founder of the professional online account Blank.
A few meters from the hotel BNP Paribas and La Banque Postale also present their protégés, attracting the crowd with many shimmering colors and slogans in English. In recent years, fintech has become increasingly important in this sector. In France, they raised nearly 2.3 billion euros in 2021, according to the French Fintech Association, and represent a third of unicorns, these growing startups worth more than a billion dollars.
Therefore, most banks have developed programs to achieve maximum speed: incubators, specific financial solutions, their own startup programs and more. For them, it is, in particular, a matter of identifying strategic technologies, companies that could achieve profitable success. or encroach on their territory. Faced with these “nuggets”, banks have several options. First: redeem them. This is what Société Générale did in 2020 with neobank Shine or next year’s BPCE group with Jackpot, which specializes in digital shopping vouchers and gift cards.
Most banks have also launched specialized funds endowed with several hundred million euros just to buy FinTech. But they are not the only ones interested, says Maximilian Nayaradu, Managing Director of the Finance Innovation Competitiveness Cluster: “Today we see that financial technology has become big enough to buy others” he says, referring in particular to the case of home insurance specialist Luko, who bought out his German rival Coya and then French Unkle.
“Loss of flexibility”
With competition between investors, the price of promising startups is growing easier. Therefore, some banks have to pay huge sums for these acquisitions, such as the American Goldman Sachs, which paid $ 2.2 billion for consumer credit specialist Grinsky. In addition to cost, integrating FinTech into a large group often does this “Lose flexibility” and therefore in the speed of innovation, says Eric Kahn, Head of Digital at Crédit Agricole. Hence the importance of developing other strategies.
“We had the first stage, when we didn’t know about each other between big banks and financial technicians, and then the second, when we loved each other too much: there were a lot of acquisitions. () and there were setbacksexplains Reno Dumora, Deputy General Manager of BNP Paribas. Now we have entered the third phase: we have reached real maturity and are trying to work better with them. » In April 2022, Crédit Mutuel Arkéa sold the Leetchi cat website and its subsidiary MangoPay to the American Advent Foundation to preserve only a minority stake.
“Being in the minority gives an opportunity to have interesting discussions: we do not invest in control, but to understand well” technology and customer needs, explains Eric Kahn. Another possibility: to establish a commercial partnership with startups. A give-and-take solution that typically allows fintechs to benefit from new customers at the bank and offer new services to the bank.
86% of French financial and insurance startups have partnered with other companies, more than half (54%) with banks, according to a study by Finance Innovation and Truffle Capital, conducted by hundreds of FinTech. It also avoids competition between small entities and large banking groups, which sometimes find it difficult to innovate so quickly.