OTP Bank expands startup program, adds implementation period

OTP Lab offices

Budapest-based OTP Bank is expanding the scope of its startup development program beyond Hungary to Russia, Ukraine, Croatia, Serbia and Albania and is adding a new opportunity for startups to work closely with practitioners.

The startup program, which launched in 2017 through the bank’s in-house innovation group OTP Lab, is currently accepting applications for its third class. András Fischer, the bank’s head of innovation, told Bank Innovation that the next class will allow the startups to work with different regional offices on challenges unique to their situations.

In addition to broadening the geographic scope of the program, OTP also is changing the program design. The program previously included a three-month proof-of-concept development followed by a “demo day”; now, following the initial three-month period, a select number of startups will be invited to participate in a six-month, focused implementation effort.

“The program started by collecting business needs or pain points,” said Fischer. “Our experience over the previous years is that, even though we sometimes had a promising collaboration [during the three-month proof-of-concept stage], the planning or thinking beyond that wasn’t well anticipated.” Through key performance indicators developed by the bank, OTP will determine which startups graduate to the six-month implementation period.

See also: Inside OTP Lab, Eastern Europe’s most adventurous bank innovation effort

Fischer emphasized that the startup program priorities are pain points identified by the bank. Focus areas include advanced data and analytics; customer experience and servicing; internal efficiency; product innovation; and SME banking. In addition, a “surprise us” category applies to noteworthy ideas that don’t fall under any of other delineated areas.

Fischer noted that the initial focus of the program was on early-stage companies, but it’s now working with later-stage companies which have validated products on the market and a customer base. The companies with which OTP now works through the initiative are less interested in investments from the bank than opportunities to implement their solutions within the bank’s network, he explained. OTP does not take equity in the startups, a move that maintains the independence of the program from the activities of the bank’s corporate venture arm.

OTP Lab is housed within the bank and works across organizational teams, a move to disseminate new ideas as widely as possible across the organization. “I would be afraid to be detached from what is really important and what are the real pain points,” Fischer recently told Bank Innovation.

OTP Bank, which is one of the largest financial institutions in Central and Eastern Europe, has $55 billion in assets and 18.5 million customers in 10 countries. In July, the bank joined the ecosystem of INV FintechBank Innovation‘s sister technology accelerator program operated in collaboration with technology provider Fiserv.