Here’s What Banks and VCs Talk About

© Can Stock Photo Inc. / MysmaskenWhile it may not seem like it, banks talk to venture capitalists focused on financial technology on a regular basis. What about? Startups, of course.

“It’s important for me to know what banks are thinking,” Bain Capital Ventures managing director Matt Harris told Bank Innovation. “Banks are very interested in fraud, the Target breach got a lot of people’s attention. This whole category[fraud] is getting a lot of funding.”

There are other areas of interest for banks, too, including risk, compliance, and security. “Banks are always trying to be on the cutting edge” in those industries, Harris said.

Arjan Schutte, founder and partner at Core VC, agreed. “I talk to banks fairly regularly and I spent quite a bit of time talking to compliance people at banks, which is definitely a topic of conversation. We also talk regulation and relationship to CFPB state regulators… On one hand, everyone’s excited about the possibility of innovation in retail banking, but no one really wants to do it.”

Banks also like to discuss B2B banking issues and how they can support fintech startups. Schutte noted that banks are under regulatory scrutiny that makes working with bitcoin startups particularly difficult.

SBT Ventures partner Matteo Rizzi talks to banks “every day” about a variety of topics, he said. Areas of interest for these banks include small and medium enterprise lending and the P2P economy. The banks give each other tips on how to handle innovation in the financial services industry as well, Rizzi said.

SBT Ventures is the venture capital arm of Sberbank, the largest bank in Russia. While most bank-funded VC’s operate autonomously, it’s easy to assume that investments are made strategically. SBT Ventures recently led Moven’s Series A round, and Rizzi spoke about how excited he is about Moven.

“We believe in the outsourced mobile/PFM infrastructure through financial institutions, even if in the U.S. the approach will be direct,” Rizzi said. Moven CEO Brett King told Bank Innovation that SBT’s connection to Sberbank was appealing, “SBT is connected to the largest bank in Russia, so it doesn’t take a genius to figure out it would be massive for revenue and distribution and a huge partnership with their brand.”

Banks are clearly interested in new startups in the fintech industry, and sometimes even helping to fund them via their venture capital division. Given the banks’ interest in startups, conversations with venture capital firms are a natural next step.

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