How FinConecta Helps Finance Go Digital Faster

Jorge Ruiz, CEO of FinConecta

The ever-expanding innovation ecosystem has been top of mind at Archie. However, with change comes growing pains. While collaboration is important for both fintech startups and traditional financial institutions as they evolve, there are both successes and challenges when they try to work together. 

We spoke with Jorge Ruiz, CEO of Miami-based FinConecta, a tech company with a platform designed to accelerate the digital transformation in financial services. Jorge worked for 18 years at CitiGroup, and in this conversation he talks about the inefficiencies he sees when fintechs and financial institutions collaborate, and how his new platform can help alleviate pain points and expedite the pathway to growth.

Archie: What are key elements that typically slow down a larger, more traditional financial institution when innovating or launching new services in collaboration with fintech startups?

Jorge: The first obstacle is the notion that innovation—or digital transformation—should be managed exclusively by the tech team. Frequently, it is not viewed as a strategic priority in which everyone throughout the organization, including the CEO, should be involved. Innovation requires a shift in all functions of the business.

The dilemma of “whether we should build or find a partner?” is another challenge that startups are up against. Many financial institutions (FIs) choose to develop their own solutions. This restricts the amount of work each institution may accomplish in a given period of time. It is impossible for a single institution to generate solutions faster or more efficiently than the market.When FIs finally decide to collaborate, the most difficult hurdle is integrating the new technology and business processes. 

Archie: How has this changed over the last five years?

Jorge: While the challenges remain the same, more and more organizations are realizing that there are better and more efficient ways to operate. Open banking has also helped FIs to see the potential for monetizing data and non-productive assets.

Archie: What are the core challenges that startups face when working with larger financial institutions?

Jorge: Time restraints - it can take several months from the first presentation to a client until the closure of a business partnership. Once the deal is closed, the time and resources dedicated to implementation may be significant. Fintechs can end up duplicating work, making scale-up more difficult.

Archie: Your 4wrd platform addresses both the ‘time’ and ‘duplication’ problems by connecting capabilities between fintech startups and traditional financial institutions. Can you explain how this works?

Jorge: We built the platform with the objective that each participant only integrates once regardless of how many partners they have.Through our platform, once an FI is integrated, it can work with multiple fintechs via that one integration. The goal is to reduce time to market for both fintechs and FIs. As you can imagine, this also accelerates the opportunity to scale for the fintech.  

Archie: What specific ‘case failures’ or ‘delays’ did you see that led you to believe a platform like this could better facilitate innovation collaboration between fintechs and traditional financial institutions?

Jorge: We saw failures throughout the fintech and FI journeys. From FIs finding the perfect fintech to partner with and putting them to the test, to integrating and building a business, to going to market. In general, there is a lack of understanding of the process and commitment required to make a partnership successful. From an efficiency, cost, and risk management standpoint, having a platform that can take a full approach from innovation programs—and mitigate the challenges of selection, testing, integration, and going live—makes all the difference.

Archie: Does your business mindset tend to identify more closely with the fintech startup seeking to disrupt the financial world, or with the traditional financial institution that is trying to adapt to the new ways in which customers manage their finances?

Jorge: We are an ecosystem player—we believe in the development of ecosystems. We help FIs innovate and transform their businesses into digital businesses, and also help fintechs looking to collaborate with established institutions. 

There is a need to collaborate with companies who want to launch their own marketplaces. Payment processors and core banking providers are examples of such businesses that have relationships with a variety of FIs, and want to provide their clients with a quick way to digitize their business. We see them as all part of the fintech ecosystem as well. 

Archie: Looking ahead, in which global regions do you think technology innovation will see significant growth and focus in 2022?

Jorge: In the past few years fintech has become the leading industry in the tech space in all regions. Not too long ago, cities like London, New York, and Singapore were seen as ‘the’ place to go when it came to innovation. Now, there are entrepreneurs in Brazil, Kenya, Philippines, and most European countries developing new innovative technologies and use-cases. They are all scaling at an incredible pace and entering previously uncharted territories, like DeFi and crypto currency.

Open Banking (OB) regulation and market forces in some regions are accelerating the OB agenda globally, with new business models like embedded finance and more elaborated structures being implemented as we speak.

Archie: What key capabilities within fintech solutions do you see traditional financial institutions looking to adapt into in 2022?

Jorge: When we talk about fintechs we need to separate them into two  groups. In the first case, you have fintechs that offer their services to banks as white-label, to enhance the relationship with their customers. In the second case, you have fintechs that want to partner with banks to use their infrastructure and data to launch their own products. 

In the first case customer engagement is the most critical need, moving from traditional channels and models to a digital experience. The second will focus on embedded finance, making FIs part of a product, not functioning as an independent service.

Archie: Besides supporting digital businesses and leading the way in open banking, what is FinConecta doing now and planning for the future? 

Jorge: We're licensing our technology to companies and FIs that provide services to a variety of institutions and want to start their own marketplace. We are going to white-label our technology to enable the creation of marketplaces that cater to specific needs or client groups. For example, we recently partnered with Ficanex, a Canadian company that currently provides ATM and P2P services to 160 Canadian banks.

Check out FinConecta here.