When consumers think about which companies are launching the latest, most innovative products, banks and financial services firms don’t usually feature high on the list.
However, financial institutions are investing hundreds of millions of dollars in nimble startups to help encourage financial technology or “fintech” innovation. The big financial services companies are often hindered by outdated technology so smaller tech firms help them reduce the time needed to develop new products and — more importantly — strengthen their competitive position. Startups benefit from the access to capital and they gain a deeper understanding of banks’ pain points so they can develop a truly scalable solution.
If this is being accomplished in one of the most heavily regulated industries, consider the benefits large companies could reap from partnering with smaller startups as they look for new ways of developing new ideas and bringing them quickly to the market.
Startup entrepreneurs often lack the resources to scale their latest great idea and achieve global reach. But pair them with large companies and these organizations — which have been at the backbone of the global economy — become bridgemakers, delivering and accelerating smaller entrepreneurs’ access to global markets. The collaboration can help entrepreneurs gain access to foreign investment, local distribution networks in far reaches of the world and create a halo-effect of overall credibility.
In return, the large companies reap the benefit of greater access to new technologies and highly skilled talent, reduced R&D costs, and the promise of innovations that will deliver new revenue streams.
One example of such collaboration was when the U.S. behemoth GE teamed up with Quirky, a well-funded startup for crowdsourced inventions, to create a platform named Wink. The app is a “command center,” which lets consumers control their Internet-connected devices. The companies complement each other. GE brought scale, and Quirky brought speed. Together, they quickly connect devices. For instance, a consumer can control an air conditioner with a call from a Wink-enabled smartphone.
By teaming with startups, large companies also can take advantage of the smaller partner’s nimbleness to enter new regions, using newer digital channels. For example, Unilever recently backed seven innovative digital companies as part of its “Go Global” program, giving each company funds, mentoring and a range of services in exchange for a customized digital marketing pilot for its brands. The campaigns will go live across Africa, Asia, Europe and North America.
In the race to improve competitiveness in a challenging global market, small and large companies can accelerate innovation by working with each other rather than against each other.
Image credit: CC by Jean-Jacques Abalain