Adjusting Approach in Fintech: Readying for Business-to-Business Sales in the Enterprise Sector
Gainbridge, an insurtech company, is revolutionizing the insurance and retirement industry. However, as with many fintech startups, there comes a time when the question arises: should we sell to other tech-forward startups or to banks, insurers, and legacy platforms?
Selling to legacy financial institutions is challenging. These institutions move slowly, undergo thorough scrutiny, and have a history of outages, compliance failures, and complex integrations. Yet, they are where the real money lies, and VCs see a more predictable, defensible business model after a strategic shift.
Key Steps for Successful Transition
Leadership and Operational Shift
As the company evolves beyond early growth, it often needs a different type of leadership to navigate larger, established clients like legacy banks. Founders might need to hand over CEO or operational roles to experienced leaders with a track record of scaling businesses and managing complex financial institution relationships. This leadership brings financial discipline, sustainable growth focus, and new revenue strategies aligned with enterprise customers' expectations.
Adapt Technology and Integration
Legacy financial institutions operate on established, sometimes rigid workflows with deep compliance and risk management requirements. Products must integrate smoothly with these systems without extensive restructuring. Tailoring solutions to plug into existing workflows and addressing banks’ specific pain points improves adoption chances.
Build Compliance and Trust Credentials
Partnering or collaborating directly with banks or BaaS (Banking-as-a-Service) providers can lend credibility and help navigate complex regulatory landscapes. Such partnerships allow fintechs to leverage existing infrastructure, licenses, and expertise, making it easier to align offerings with banks’ standards and build trust.
Phased Implementation and Change Management
Financial institutions are sensitive to disruption, so a phased rollout of fintech solutions, supported by clear communication and staff training, is vital. Demonstrating value through early wins and addressing employee concerns reduces resistance and fosters a culture that embraces innovation and technology.
Understanding Institutional Needs and Market Positioning
Unlike startups that may prioritize innovation speed, legacy banks emphasize stability, risk management, and compliance. Fintechs must evolve their sales and customer success strategies accordingly, emphasizing reliability, security, and long-term partnership benefits.
Selling to large financial institutions gives access to decision-makers who manage billions. Aligning hiring, go-to-market strategy, and product development with the long-term vision of serving enterprises is crucial for success in selling to large financial institutions.
Startups initially target other startups because of shorter sales cycles, more technical buyers, and a clearer value proposition. Selling to large financial institutions improves the stability of a business, with margins improving, especially on fee-based models, after a strategic shift.
However, this model has a ceiling. Customers are often burning venture capitalist money, their stability is shaky, and they may pivot or fold. Compensation needs to shift towards relationship depth and pipeline quality, with higher base salaries, slower variable payouts, and quotas built for fewer but larger wins. The product roadmap needs to mature, focusing on scalability, supportability, and audit-friendliness to demonstrate that the company is a strategic partner.
Churn drops dramatically after a business strategy reset, making the long game worth the effort for fintech startups seeking to penetrate the lucrative market of legacy financial institutions.
[1] "Transitioning to enterprise sales: A guide for B2B SaaS startups." SaaS Capital. (n.d.). URL: https://saas-capital.com/resources/enterprise-sales-guide/
[2] "Fintechs and Legacy Banks: The Future of Collaboration." Capco. (2020). URL: https://www.capco.com/insights/white-papers/fintechs-and-legacy-banks-the-future-of-collaboration
[3] "Navigating Change Management in Banking." Deloitte. (2021). URL: https://www2.deloitte.com/us/en/insights/focus/financial-services/change-management-in-banking.html
[4] "The Fintech Revolution: How Technology is Changing Banking." The Guardian. (2018). URL: https://www.theguardian.com/technology/2018/may/21/the-fintech-revolution-how-technology-is-changing-banking
[5] "Fintech and the Future of Banking." McKinsey & Company. (2018). URL: https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/fintech-and-the-future-of-banking
Jayant Walia, an experienced leader with a background in business, technology, education, and self-development, might be an ideal CEO candidate for Gainbridge as it looks to navigate the complex world of legacy financial institutions. To successfully transition to serving these large, established clients, Gainbridge would need to focus on building compliance and trust credentials, adapting technology to seamlessly integrate with existing financial institution workflows, and understanding the institutional needs and market positioning to emphasize reliability and security. Selling to large financial institutions can provide a stable business model, but the product roadmap, sales strategy, and compensation packages must evolve to meet the needs of more conservative enterprise customers.
