Wells Fargo Launches Accelerator Program
Wells Fargo has launched a financial technology accelerator program that combines a cash investment for a minority stake with six months of coaching and collaboration. The bank has selected three companies to pilot the Wells Fargo Startup Accelerator:
San Jose, California: A developer of mobile services using a unique combination of location and mobile identity technologies to secure commerce and enable mobile marketing.
Kansas City, Kansas: The creator of EyePrint ID that transforms a picture of your eye into a key that protects your digital life.
New York: The builder of state-of-the-art artificial intelligence technology that improves the consumer experience on mobile devices through intelligent conversation.
The bank makes an investment for $50,000 to $500,000 in each selected startup and then provides business planning and coaching from its line of business leaders over a six-month period.
Wells Fargo has long been a leader in using technology, explained Steve Ellis, executive vice president and head of wholesale services at the bank, noting it was the first financial service company in the U.S. to give customers free Internet access to account balances.
“We look at technology as an important driver to differentiate ourselves from competitors, and we have been leveraging technology for 20 years.”
For a startup that wants to sell technology to a bank, just finding the right person to talk to can take months, or even years. Bipin Sahni, head of the bank’s Innovation, Research and Development group, said companies were knocking on Wells Fargo’s door but didn’t understand how to work with the bank, which led to the idea of developing an accelerator program to help them.
The bank offers a boot camp to get the startups going with a line-of-business sponsor inside the bank so the technology company is talking to a business person with a real business challenge to solve, not just with a technologist.
Although the bank takes a minority stake in the participating companies, it is more interested in developing ideas than in generating a return. It also does not ask for exclusive rights to software developed in the program.
“We are using this to draw innovators into Wells Fargo,” explained Braden More, senior vice president for enterprise payment strategy at the bank.
“We are very focused on companies that are trying to break into the financial services sector or to get their first Fortune 500 customers. Those are big walls to climb for a young company. We add a lot of value by working in a collaborative fashion and connecting them to subject matter experts who can help them build appropriately.”
Some of the participating companies will be exclusively focused on financial services but others may be developing solutions, such as authentication and security, which can be used in a wide variety of industries.
The accelerator will help companies with good ideas, but not yet a finished product, work with business professionals at the bank to develop their offering in a way that can meet the requirements of a large enterprise in a highly regulated business.
“We can sit down with them as someone who would buy the product,” said Sahni. “It’s almost an internship. They get to know Wells and we get to know them.” The end game is for the company to place the product and for Wells to find a product in an area where it is trying to unlock value for its customers. Much of the innovation he sees is linked to mobile, from user location to using a mobile phone and an eyeball selfie for authenticating a user — much more secure than a password, to offering intelligent automated conversation over mobiles for banking customers. The bank is also looking for vendors who are good at specific types of data analytics it is pursuing.
“We are already doing a proof of concept but I could’t find the right startup to invest in,” said Sahni. Wells has started an outreach program to encourage more applications, although that may prove unnecessary. In the first two days after making the announcement Wells received three dozen applications, growing to 90 over the weekend.
Ellis said the bank was initially planning to focus on the commercial and wholesale bank but as the program was publicized internally they saw a need for it across the company.
“We have good connections across the major business lines and see a lot of work around mobility and digitalization; there is still a lot of signing paper with wet signatures.”
He expects that many of the products developed through the accelerator will be used across banking.
“Cyber security, processing efficiency — these are ideas that could be good for the industry.”
In addition to the three firms it has announced, the Startup Accelerator will give 10 to 20 young companies each year the opportunity to develop and refine products in a collaborative environment. Applications will be accepted twice per year, with a deadline of October 1 for this fall’s program. A Wells Fargo investment committee composed of senior technology, venture banking, and innovation leaders will evaluate candidates and select participants. Prospects can learn more and apply online at https://accelerator.wellsfargo.com.
“The Startup Accelerator also creates a space for our own innovators,” said More. “We have our own innovation teams, including Bipin, inside the company. We hope to gather more and more of the innovators from inside the company.”
For the line of business leaders who become the executive sponsors for the startups, the role is a both a privilege and adds some additional work. Each entrant into the program is evaluated by business and technology people at the bank to see where it would fit best internally.
“Then we take it to that team and see if they want to champion the company,” said Ellis ”We are taking that decision-making down into the business and make sure the solution does engage with the problem that have an interest and and want to work on.”
The accelerators has generated excitement inside the bank, Ellis added, as it adds a bit more structure to what the bank has been doing in innovation, and wins more focus from higher levels of the company.
In addition to solutions specifically for financial services, Wells Fargo is open to startups with programs in other areas of interest to a large firm. They could range from workforce management to customer experience to environmental systems.
Startups that think they are lean and agile might find it a challenges to keep up with the not-so-stodgy bank; Wells refreshes its customer-facing front end systems every 90 days, and 80 percent of the changes are in response to customer suggestions, Ellis said.
“Active customer involvement is part of our culture. The link between the business and the technology that we have created is a really important part of the accelerator program. A lot of the time these technology firms come and talk to the tech people, but it is more than technology — it is about people doing things.”
For a startup, that makes talking to Wells Fargo different from talking to a VC firm.
“We are focused on bringing things into the business,” said Ellis.
With its headquarters located in San Francisco, Wells Fargo is well positioned to take a leadership role in financial technology, although it’s intriguing that only one of its three startups is from the Silicon Valley area.
For years technology companies have approached Wells Fargo, but the bank didn’t have a process for them, Ellis added.
“Somehow they would find me,” he said. Some of them, like Voltage Security and Itemfield, turned into success stories. No telling how many never did find the right person to talk with, though.
“We have helped a lot of companies, said Ellis. “It is part of our DNA since being a relationship bank is very important to us.”
Wells Fargo has an interesting relationship with tech companies. In today’s Financial Times, Wells CEO John Stumpf is profiled:
Twelve years ago, John Stumpf, chief executive of Wells Fargo, asked a prominent technology chief executive for advice on where he should buy a house in San Francisco.
The response was not as friendly as he had expected. As Mr Stumpf recalled, the tech chief said: “I wouldn’t buy one. We’ll put you out of business in three years. You won’t be relevant.”
Unfortunately he didn’t name the technology company, leaving the reader to wonder if it is still in business.
Wells certainly is. As the FT notes, Wells Fargo is now the biggest bank in the world by market cap. The article also mentions the bank’s internal innovation work and the lab.
The idea for fintech innovation labs has taken off since Accenture and the Partnership for New York launched the first in 2010 and have run them annually since. Accenture expanded its program to London, which is now in its third year and this year launched a third lab in Hong Kong for Asia.
Image credit: Wikipedia