What Can Fintech Accelerators Teach Financial Advisers?
“The business world today requires different tools, skills, and mindsets because the world is changing, customers are changing. Unfortunately, many businesses are still on old assumptions and old views on what they think the world looks like and what clients want . . . But business as usual is dead.” — Patrick van der Pijl
Fintech and start-up accelerators help emerging companies with new products, services, and business models succeed. They offer powerful solutions to the new and evolving challenges confronting the financial services industry and have much that they can teach financial advisers.
Many accelerators operate by inviting start-up companies into open competition to identify those with the most potential. While they recognize the winners are great technologists with new value propositions and industry-changing ideas, they know these attributes alone are not enough to succeed. Start-ups must develop into competitive and agile firms that can pivot and execute with precision in today’s fast-changing business environment.
The accelerators facilitate this by transforming the few selected business owners into entrepreneurs, by turning linear thinkers into non-linear or lateral thinkers, methodical doers into artful creators, hardened experts into constant learners, and technicians into innovators.
A Consistent Parallel
Since their program typically has a duration of three to four months, accelerators are necessarily action-oriented and bottom-line driven. Because they must jumpstart growth and steer their companies in a focused direction within a compressed time frame, they avoid the conceptual for the practical and effective. Advisers have a similar mindset.
The central question then is:
What can advisers learn from their accelerator counterparts about the mechanics of managing business innovation?
Accelerators offer a diverse arsenal of field-tested tools that have been engineered to give companies a competitive edge.
A few core tools and processes, by way of example, include:
Business Model Canvas
The Business Model Canvas is a simple, one-page template composed of nine boxes that represent a firm’s key functional areas — target customers, value proposition, critical partners, resources, activities, channels, relationship structure, revenue streams, and cost structure. It spells out how a firm creates, delivers, and captures value for its target customers and illustrates the essential relationships among the different parts of the company that propel that value creation forward.
Design thinking is a proven problem-solving process that innovative companies across the globe have embraced. It harnesses a set of skills and mindsets with which firms can better examine and understand the obstacles they face.
The design thinking process challenges assumptions and focuses on customers as people, not as marketing or demographic categories. It takes problem solving out of the abstract and into the practical through “learning by doing” in real time with real customers.
Open Innovation and Collaboration
Too many business people rely only on themselves or a small inner circle for “expertise.” Too often this creates groupthink and embedded, atrophied assumptions. But the best way to learn and innovate is to step away from the familiar and open up to diverse perspectives and experiences.
Open innovation harnesses external resources — clients, vendors, strategic partners, cross-industry discussions, etc. — to help develop new products and services. It emphasizes sharing and collaboration over the traditional, internally-focused, siloed mentality. Innovation is no longer the sole purview of specific people or departments but rather an open and integrated process.
Accelerators nurture a network of corporate and professional mentors and strategic partners and require their cohort firms to reach out and share ideas. With this added insight, they further fine-tune their thinking, ensuring that they receive vital feedback and continue learning through each stage of their development.
Accelerator programs are fertile ground for advisers and investment professionals and can furnish the financial services industry with new ways to compete and evolve its business models.
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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.
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