Transforming financial services by partnering with technology start-ups

Abstract

In the changing and competitive landscape of financial services in South Africa, there is an emerging force that is challenging the existing operational processes of the major corporations. This force is a group of skilled entrepreneurs with the technical skills and in-depth process knowledge, that are targeting existing processes, redesigning the rules and in some cases creating new rules. Advancement in technology enables these start-ups to disintermediate existing business and offer personalised niche offerings. Financial services corporates are in a unique strategic position where the business environment and industry forces are changing, bringing the risk of new entrants that are competing for market share in an economic climate that is influenced by many factors outside of the businesses control. Deficiencies in internal capabilities coupled with a historical rigidness in change execution, are creating the opportunities for the start-ups to compete or partner. The focus of this research is on the transformation of financial services by partnering with start-ups. Data was collected through indepth, semi-structured interviews with leaders from four financial services corporations. The researcher analysed the benefits of this relationship, evaluated the decision-making factors and identified design patterns that can be applied to these partnerships. This study contributes to the literature and management practice of assessing and implementing strategic partnerships with entrepreneurs to create capabilities and competitive advantage, to generate value for the corporate’s stakeholders.