Pilot with a bank: how a startup can’t crash on the runway
This summer, we at VTB, with the assistance of the IIDF, are conducting a second set to our accelerator. More precisely, we collect applications before August 1. A second set would not have been possible without a successful first set, according to the results of which 13 pilot projects were launched, and three more are being prepared for launch. Now we have gained important experience and, in order to share it with startups, we took part on July 10 at the IIDF conference “Pilot with a bank: how to prove the value of an IT solution and move to cooperation”. In this post we will share with you the main points of the conference and the main tips on how to establish interaction with the bank and what to expect from it.
At the conference, Irina Tarasova, Director of the IIDF Corporate Programs Department, VTB Accelerator Director Natalia Degtyareva, and the founders of four startups who had a chance to collaborate with VTB and other banks made speeches: Sergey Budyakov (Usedesk.ru), Sergey Isaev (DataFabric), Sergey Umentaev (PimPay) and Ivan Kochetov (The Waay). Thus, we combined the innovative expertise of IIDF, our own developments and the experience of startups themselves, with all conceivable rakes and insights.
Everything is simple here. The pilot project allows you to check in express mode and without unnecessary financial risks for both parties, how useful the solution is for the bank and suits it from the point of view of technological and business prospects. At VTB Accelerator, we learned how to conduct pilots in a fairly short period of time (a guideline of 14 weeks), during which it is possible to understand whether the development is effective in conjunction with our internal processes, whether the startup team has been successfully selected, and whether its business model fights with our expectations.
The general mechanics of working with startups has been worked out for the first set. This cooperation has one fundamental feature, which, if not taken into account, poses problems. In general, it lies on the surface: banks, like other large corporate structures, are built fundamentally different than startups, and, as a result, live according to other laws, with different planning cycles and goal setting. Learning to combine both realities is the main thing why such test launches are needed. Otherwise, no matter how promising win-win may be, partnerships will fail. Here are some tips on how to make it work with the highest probability.
Understand whether your project can be implemented by a pilot with a corporation. Do not rush to check the box next to this item. It is possible, for example, that shifting your b2c service to the b2b paradigm is more expensive and more complicated than it sounds. Or that you simply don’t have free hands in your team who could do test implementation on time.
Clearly identify the niche in which you work. And also what class your product belongs to, what it does, what killer feature it has. For example, analysis of customer behavior for premium and private banking with the issuance of product recommendations is a completely intelligible direction, where competition is still not too intense.
Do not cut off the possibility of cooperation if it seems that your project is not sharpened for fintech. We at VTB, of course, look mainly towards fintech startups. But the bank is a huge structure, and it has something to improve at the level of internal business processes, communications, and staff training. Say, a small educational startup with a clear focus on T&D optimization is more interesting for us than even a cool fintech service, which is unclear which way to apply to our product architecture.
Find the end customer of your solution within the corporation and understand its motivation. It is important that your project alleviates someone’s pain, and not something there that optimizes optimally. It is best if possible to quickly find such a “painful” unit in the organization, or even a specific person, to understand what his problem is, on the basis of which KPIs to judge whether it is eliminated, what financial result your decision gives. Among other things, the presence of such an “agent of interest” greatly accelerates all processes during the pilot. If you convince your counterpart that you will be able to effectively cope with his urgent difficulties, he will promote your project to other departments and encourage colleagues when it comes to approvals. This applies not only to acceleration programs.
We at VTB, by the way, do not share this opinion. In a large corporate structure, there may be many who are potentially interested in your product. So we build clear selection procedures through the Accelerator, which allows us to create the widest offer of internal customers for a startup.
Hypothesize the values and metrics of the pilot project. Of course, most often KPIs for your pilot are displayed with the participation of your internal customer inside the bank. Nevertheless, it is necessary that already at the first contact you can start from something when you will justify the effectiveness of your product.
Make a roadmap with the main stages of the project. Try to take into account all possible deployment scenarios of the pilot. You should not treat what is fixed in the agreement with the bank as an idle formality - this is a common thing when a startup deals with another startup. It won’t work out like that. You may be required to fulfill obligations under any clause of the contract.
Also, especially if you start to work with the bank not through the accelerator, get ready to "play for long." As one of the conference guests remarked, “it happens that you submit an application in the summer, by the spring of next year you finally reach a firm agreement, and yet you have already passed two pilots.” That is why in VTB Accelerator we set rather short start intervals.
Make sure that your team is able to communicate a lot, and also to work with documents accurately and without delay. Because of something, and there will be a lot of documents - simply due to the specifics of the banking sector: meeting minutes, NDA, contracts, invoices. Prepare documents in your form, but be prepared to quickly sign them in the form of a bank.
Also, be mentally prepared for the fact that you have to communicate with a variety of stakeholders in the bank and balance their interests between them (and not all of them will respond equally willingly and promptly). It is important to be patient and be able to make concessions.
Take into account the specifics of the banking sector. Not all mechanics who work in small and medium-sized businesses operate in the enterprise segment. Therefore, not all scenarios of the product will be implemented as you conceived "ashore." For example, a bank will inevitably be waiting for you to agree with the IS service, restrictions on working with data, etc. In some financial organizations, even connecting to internal systems for test launches is a pain.
Be prepared to justify the cost of the pilot project. As part of our Accelerator, we allocate up to 500 thousand rubles for such test launches, and this is more than the industry average. In principle, it is not typical for banks to allocate budgets for experiments from the category of “What if it fires?”: Any run-in of technology is financed by an internal business customer (see above) who wants to solve their problem with a high ROI . If you need more money, then there must be a clear understanding of why they are needed and how these costs will pay off when you start in the test circuit.
Build hypotheses on scaling during the pilot. Otherwise, it is highly likely that cooperation will end with this dialogue:
If the economic effect of implementing your solution is narrowly local, it may not even pay back the bank’s costs of interacting with you.
If possible, assign a team to the project that will deal with it in priority mode. Cooperation with the bank requires involvement, and dealing with it on a residual basis is a dubious tactic. In addition, do not throw all your energy into the pilot: a similar test launch opens up potential business opportunities, but does not guarantee that the cooperation will continue and repeatedly pay off your costs.
Do not give up after the first unsuccessful attempt to "go" to the bank. You may have already talked about the prospects of cooperation with someone at the bank, but you were refused or ignored you. This is not a reason to bypass the bank. The fact is that banks have dozens, if not hundreds, of divisions, each with its own business processes and goals. Not the fact that you immediately got to the right one (more precisely, where your product can be used). To accelerate a startup with its internal customers in banks and an accelerator helps. Now, at the stage of analyzing applications, specialists from more than 30 departments are joining VTB Accelerator.
Until August 1, inclusive, we continue to accept applications for the second set of VTB Accelerator. All the details - the conditions of the pilots, the priority areas of work for startups, etc. - on our website . If you are interested in learning more about our first accelerator, there is a separate article about it in the blog. If you have any questions, we will be happy to answer them in the comments.
At the conference, Irina Tarasova, Director of the IIDF Corporate Programs Department, VTB Accelerator Director Natalia Degtyareva, and the founders of four startups who had a chance to collaborate with VTB and other banks made speeches: Sergey Budyakov (Usedesk.ru), Sergey Isaev (DataFabric), Sergey Umentaev (PimPay) and Ivan Kochetov (The Waay). Thus, we combined the innovative expertise of IIDF, our own developments and the experience of startups themselves, with all conceivable rakes and insights.
What are good pilots for banks?
Everything is simple here. The pilot project allows you to check in express mode and without unnecessary financial risks for both parties, how useful the solution is for the bank and suits it from the point of view of technological and business prospects. At VTB Accelerator, we learned how to conduct pilots in a fairly short period of time (a guideline of 14 weeks), during which it is possible to understand whether the development is effective in conjunction with our internal processes, whether the startup team has been successfully selected, and whether its business model fights with our expectations.
The general mechanics of working with startups has been worked out for the first set. This cooperation has one fundamental feature, which, if not taken into account, poses problems. In general, it lies on the surface: banks, like other large corporate structures, are built fundamentally different than startups, and, as a result, live according to other laws, with different planning cycles and goal setting. Learning to combine both realities is the main thing why such test launches are needed. Otherwise, no matter how promising win-win may be, partnerships will fail. Here are some tips on how to make it work with the highest probability.
Things to take care of when you have a pilot with a bank
Understand whether your project can be implemented by a pilot with a corporation. Do not rush to check the box next to this item. It is possible, for example, that shifting your b2c service to the b2b paradigm is more expensive and more complicated than it sounds. Or that you simply don’t have free hands in your team who could do test implementation on time.
Clearly identify the niche in which you work. And also what class your product belongs to, what it does, what killer feature it has. For example, analysis of customer behavior for premium and private banking with the issuance of product recommendations is a completely intelligible direction, where competition is still not too intense.
Ivan Kochetov (The Waay): “In the case of European banks, it is generally highly desirable that you could poke a Gartner quadrant in one or another zone during the initial contact and say, for example:“ We do CRM ”or“ We have a mobile bank. ” And when you declare that you have both CRM, a data analysis platform, and personal recommendations, and what else is not there, the chances of finding common ground are much less. ”
Do not cut off the possibility of cooperation if it seems that your project is not sharpened for fintech. We at VTB, of course, look mainly towards fintech startups. But the bank is a huge structure, and it has something to improve at the level of internal business processes, communications, and staff training. Say, a small educational startup with a clear focus on T&D optimization is more interesting for us than even a cool fintech service, which is unclear which way to apply to our product architecture.
Find the end customer of your solution within the corporation and understand its motivation. It is important that your project alleviates someone’s pain, and not something there that optimizes optimally. It is best if possible to quickly find such a “painful” unit in the organization, or even a specific person, to understand what his problem is, on the basis of which KPIs to judge whether it is eliminated, what financial result your decision gives. Among other things, the presence of such an “agent of interest” greatly accelerates all processes during the pilot. If you convince your counterpart that you will be able to effectively cope with his urgent difficulties, he will promote your project to other departments and encourage colleagues when it comes to approvals. This applies not only to acceleration programs.
Sergey Umentaev (PimPay): “When you work with banks, it is best to go to decision makers through acquaintances. The ideal decision maker is an innovator with progressive thinking. ”
We at VTB, by the way, do not share this opinion. In a large corporate structure, there may be many who are potentially interested in your product. So we build clear selection procedures through the Accelerator, which allows us to create the widest offer of internal customers for a startup.
Hypothesize the values and metrics of the pilot project. Of course, most often KPIs for your pilot are displayed with the participation of your internal customer inside the bank. Nevertheless, it is necessary that already at the first contact you can start from something when you will justify the effectiveness of your product.
Make a roadmap with the main stages of the project. Try to take into account all possible deployment scenarios of the pilot. You should not treat what is fixed in the agreement with the bank as an idle formality - this is a common thing when a startup deals with another startup. It won’t work out like that. You may be required to fulfill obligations under any clause of the contract.
Sergey Isaev (Data Fabric): “Once we had a situation when three cases plus one“ in reserve ”were prescribed in the contract. We primarily implemented these three basic ones. But in the end it turned out that the bank really needed fourth".
Also, especially if you start to work with the bank not through the accelerator, get ready to "play for long." As one of the conference guests remarked, “it happens that you submit an application in the summer, by the spring of next year you finally reach a firm agreement, and yet you have already passed two pilots.” That is why in VTB Accelerator we set rather short start intervals.
Make sure that your team is able to communicate a lot, and also to work with documents accurately and without delay. Because of something, and there will be a lot of documents - simply due to the specifics of the banking sector: meeting minutes, NDA, contracts, invoices. Prepare documents in your form, but be prepared to quickly sign them in the form of a bank.
Also, be mentally prepared for the fact that you have to communicate with a variety of stakeholders in the bank and balance their interests between them (and not all of them will respond equally willingly and promptly). It is important to be patient and be able to make concessions.
Take into account the specifics of the banking sector. Not all mechanics who work in small and medium-sized businesses operate in the enterprise segment. Therefore, not all scenarios of the product will be implemented as you conceived "ashore." For example, a bank will inevitably be waiting for you to agree with the IS service, restrictions on working with data, etc. In some financial organizations, even connecting to internal systems for test launches is a pain.
Be prepared to justify the cost of the pilot project. As part of our Accelerator, we allocate up to 500 thousand rubles for such test launches, and this is more than the industry average. In principle, it is not typical for banks to allocate budgets for experiments from the category of “What if it fires?”: Any run-in of technology is financed by an internal business customer (see above) who wants to solve their problem with a high ROI . If you need more money, then there must be a clear understanding of why they are needed and how these costs will pay off when you start in the test circuit.
Build hypotheses on scaling during the pilot. Otherwise, it is highly likely that cooperation will end with this dialogue:
If the economic effect of implementing your solution is narrowly local, it may not even pay back the bank’s costs of interacting with you.
Recipe from Ivan Kochetov (The Waay): “Come with a little promise and show that your solution works. Further it will be easier and faster to move. Now the launch of each next pre-project with VTB takes 2-3 weeks. ”
If possible, assign a team to the project that will deal with it in priority mode. Cooperation with the bank requires involvement, and dealing with it on a residual basis is a dubious tactic. In addition, do not throw all your energy into the pilot: a similar test launch opens up potential business opportunities, but does not guarantee that the cooperation will continue and repeatedly pay off your costs.
Do not give up after the first unsuccessful attempt to "go" to the bank. You may have already talked about the prospects of cooperation with someone at the bank, but you were refused or ignored you. This is not a reason to bypass the bank. The fact is that banks have dozens, if not hundreds, of divisions, each with its own business processes and goals. Not the fact that you immediately got to the right one (more precisely, where your product can be used). To accelerate a startup with its internal customers in banks and an accelerator helps. Now, at the stage of analyzing applications, specialists from more than 30 departments are joining VTB Accelerator.
Until August 1, inclusive, we continue to accept applications for the second set of VTB Accelerator. All the details - the conditions of the pilots, the priority areas of work for startups, etc. - on our website . If you are interested in learning more about our first accelerator, there is a separate article about it in the blog. If you have any questions, we will be happy to answer them in the comments.
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