Wells Fargo recently announced the two new startups it will be working with as part of the six-month Wells Fargo Startup Accelerator: Alpha Payments Cloud and Jewel Paymentech. Interestingly, both startups are Singapore-based, and both are in the payments space. “Pure coincidence” is how Wells Fargo responded when I asked about it, yet my need-for-constant-analysis brain refuses to accept this simple explanation. I spoke to the Wells Fargo team behind the accelerator, as well as both startups, to understand more.
On how the relationships between banks and startups are evolving
Braden More, head of payment strategy at Wells Fargo, spoke about the fintech accelerator programme and its spring 2016 class in great detail. What was most interesting was how the accelerator programme itself is different from others in the industry: “The old concept (of accelerators) was around giving space, providing infrastructure, some advisers and social as well as professional networks,” said More. “That’s not our strong suit, and we felt we could do something uniquely different. We offer mentorship with a customer (Wells Fargo). There are 7,000 banks in the US that the startup can sell to, with our support. We are very good at taking a minimum viable product and creating that into something that Wells Fargo could purchase and integrate, and we don’t prevent the startups from working with others during our relationship. Our primary aim isn’t financial, but engaging with startups to create an idea flow.”
On why neither winner is a startup from the US
Wells Fargo had an open solicitation process for its spring class. It took in a bunch of applications, did a first scan to legitimise the process, found sponsors for the ideas, and so on. Braden explained their criteria for the selection: “We had three criteria during the process, in that the startup/product should (a) help serve our current customers, (b) help grow our business, and (c) help manage expenses, challenges or pain points in the business. We saw some great ideas outside the borders of the US, and we wanted to ensure we are open to global opportunities. We saw an increase in interest from non-US-based startups, and we’re excited by that. Singapore, London, Australia and Tel Aviv are great centres of innovation and we want to ensure we give all of the startups based there an easy entry point into the US through our mentorship.”
That response made a lot of sense to me when you look at the structure of the various global banking accelerator programmes. The way most of these banking programmes scout for startups is by reaching out to their immediate physical professional network, which makes it more likely that they end up with startups from their own physical location.
Wells Fargo’s process of scouting is different, and seems to make an effort finding technology from non-obvious locations and domains. It also thinks about its programme being an entry point for startups into the US, encouraging the startups to adapt their product to suit the regulatory and cultural challenges of the US, which in turn makes the programme immensely appealing to non-US-based startups.
Alpha Payments Cloud: ‘Bridging customer excitement and technology’s immediate needs’
“If you’re a bank wanting to go to a new market, there’s a lot of integration work, signing contracts with individual vendors, or else you go with a PSP and you use whatever they offer,” said Ronan McDonnell from Alpha Payments Cloud, a payments-as-a-service platform headquartered in Singapore. “What we do is offer a middleware layer, and we provide the connections to all solution vendors, merchants and banks by acting as a middle layer where everyone has access to each other. If you’re a bank and provide solutions to merchants, you can switch products on and off quickly and easily.”
Braden More from Wells Fargo described the gap that Alpha Payments Cloud can help US banks solve: “It’s about taking the element of utilising the elegance of technology to make customer life easier. If we find success here, the customer gets one integration with access to multiple service or technology providers. It’s a very interesting opportunity because customers want a box of functionality, and this brings them all the functionality and control with a single integration point. We have a bridge between customer excitement and immediate needs to be met with technology.”
Jewel Payments: ‘Enabling traditional banks get back in the game’
“Jewel isn’t yet in the US market, but is interesting and relevant,” said Braden More. “They provide automation to reduce effort markedly for our customers. In our role as acquirer, Jewel can help track companies using various algorithms, and to find out if they’re staying on base and to identify any counterfeit goods.”
I spoke to Wooi Siang Lee at Jewel who explained how they help manage merchant risk and transaction risk using machine-learning-based predictive analytics: “If the machine has underwritten certain rules – for example, to monitor ecommerce merchants on an ongoing basis – it can be done in an automated real-time environment as opposed to a room full of analysts who would manually check a portfolio in a bank. Banks would be subject to regulatory controls or penalties by IP owners, especially in areas such as online gambling or online pornography, and we help keep track of all potential issues.
“Asia has been a great opportunity for us, and we’re looking forward to understanding the nuances and challenges of the highly complex US ecommerce market.”
Let the bank be the judge of how technology can be used
Apparently, startup sales pitches don’t work. Wells Fargo is clearly more excited about technology itself and is keen to find its own use cases for certain technologies that the product firms probably never realised existed. It is also focused on solving immediate needs and obtaining measurable cost savings using technology. Data, automation, cloud, fraud, cybersecurity, location-based services, voice, authentication, and so on, are favourite areas of investment by Wells Fargo. With the applications to its fall programme now open, I hope the fintech startups globally are listening!
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