Expert opinion

Trust, Try, and Use a Cloud

5 minutes

Sergey Zinkevich, CROC Cloud Services, Product Manager, talks about how to integrate fintech startups into banks quickly and safely.

Yesterday, paying for goods and services from a virtual wallet in a smartphone seemed a fantasy, while tomorrow, widespread automated AI-powered credit extension and biometric customer authentication in banks will become a reality. By the way, “biometric” authentication uses not only a retina or fingerprint, but, for example, an individual vein map, which service is now being promoted by a British startup. All this is enabled by a deep new technology penetration into the banking segment. Large financial institutions understand: no digitalization means no development.

Today, banks often engage expertise of fintech startups. According to Deloitte, unlike Western countries and China, there are only few such companies in Russia, with market size being about 54 billion rubles, however, they show a 10-12% steady annual growth. Despite small market size, choosing the right startup is not easy for those who drive innovations in banks, and there are several reasons for this.

Evaluating startup maturity and benefits for the bank is difficult

About a year ago, we at CROC began thinking of how to expand our solution portfolio and looking closely at existing tech startups. To regulate and organize the way we collaborate with them, we launched our own corporate accelerator. 250+ teams graduated it, and 10 products were put for production, thus proving their maturity and customer demand. Over the past year, we have understood that there are different types of fintech startups: those that work with an idea, prototype, or MVP (minimum viable product). We only collaborate with those already having a ready-to-use product and we help them pack it for further scaling to an enterprise segment. If you have doubts about project quality, ask for help organizations conducting acceleration on an ongoing basis and capable of advising you on the strengths and weaknesses of the selected company.

Internal bureaucracy hinders innovations

Any bank employee can admit that financial sector is one of the most red-taped ones. Approvals take much time due to passing multiple stages, including finance department, lawyers, and security officers. Moreover, project value does not impact timing: be it a 10 thousand or a 1 million ruble contract, it will be approved equally carefully and... yes, slowly. If a company needs and wants to launch several startups at once, such red-taping greatly complicates the life of both its IT department and personally CIO. Using a third-party site to pilot and test viability of new projects is a right choice for those who value their time and quietness. You negotiate a framework agreement with a provider only once and then use the provider's infrastructure as many times as you need.

Forecasting resource needs is a difficult task. Justifying them is even more difficult

Forecasting startup development and scalability is often a very difficult task. Some seemingly promising projects go west, while others, “dark hoses”, bring substantial business value. Using your own resources for this purpose is also risky. You may invest in infrastructure and not even use a tenth of it or, on the contrary, face explosive demand and, accordingly, dramatic lack of resources. A cloud mitigates these risks and provides a flexible, reliable, cost-effective, and safe sandbox for piloting fintech startups, thus making it unnecessary to justify a budget for new computing hardware to a CFO.

Well, if you have decided to find startups and use them to improve your banking processes, seek help from those companies that are professionally involved in checking such startups. Use cloud resources as a trusted zone to test new services, thus reducing financial and reputation risks. This accelerate your business and give it a new competitive edge.

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