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Banks want to be venture builders too

ofc feb 22.indd
Illustration: Neil Webb

As their involvement in fintech matures, large banks are focusing on building standalone digital businesses rather than just taking stakes in third-party startups through venture capital funds and accelerators. Can these new in-house ventures disprove the thesis that incumbent banks can’t create disruptive business models?

Can big banks innovate?

We all know the stereotype: big banks are complex and backward-looking. When it comes to setting up businesses based on digital technology and new consumer habits, they’re bureaucratic and risk averse.

As fintech competitors have grown, big banks have nevertheless been forced to learn from them – and from other industries – about the best structures for building new ventures inside their organizations.

Many banks’ innovation efforts are no longer focusing on gaining exposure to new technologies by taking minority stakes in fintech firms via venture capital funds – although they’re doing plenty of that too, sometimes ramping up the capital deployed and spinning out those funds.

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Dominic O'Neill head.jpg
EMEA editor
Dominic O’Neill is EMEA editor. He joined Euromoney in 2007 to cover emerging markets, focusing on central and eastern Europe, Middle East and Africa, and later on Latin America. Based in London, he has covered developed market banking since 2015.