If you can’t beat them, work with them.

That’s one clear message coming from the Money 20/20 USA conference in Las Vegas this week as representatives from large financial institutions rubbed shoulders with fintech startup founders in an effort to sort through the future of money.

One prime example: Monday’s news that major financial player JPMorgan Chase and Co. had signed an agreement with Plaid Inc. The technology startup connects consumer bank accounts with transaction applications like Venmo and Robinhood. The deal was stark testimony that collaboration within the financial technology world will likely be a key theme moving into 2019.

The agreement gives Plaid secure access to Chase’s customer database to facilitate easier sharing of financial information and provide new services to users. “We’ve seen this massive shift where people are using their checking account as a routing hub for their money,” said Zach Perret, co-founder and chief executive of Plaid. “I expect that this is going to continue.”

Rising fintech investment

Plaid’s deal with Chase represents another step in the evolution of fintech’s delicate dance with the world’s largest financial institutions. What began as competition is now moving toward collaboration, driven by the two assets that banks value most: customers and money.

CB Insights recently published a report that mapped out where the 10 largest U.S. banks are investing in fintech, and the chart is starting to look a bit crowded. The top banks have participated in 81 deals with fintech startups over the past six years, including an investment by Citi Ventures in the personal finance startup Clarity Money and a deal between Goldman Sachs and Folio, which lets consumers invest in tech-specific stocks using a robo-advisory service.

“The promise of fintech is showing there are more customers getting access,” said Shivani Siroya, founder and CEO of fintech startup Tala. “If we are putting customers at this central point then how are we enabling them with information?”

APIs drive open banking

Enabling consumers is a key premise for the fintech world as new initiatives are shaking up the traditional global financial structure. One of the forces behind this transformation is open banking, the use of open application programming interfaces or APIs to facilitate new services built by third-party developers around financial networks.

One company which has been active in the open banking space is Starling, a digital mobile-only bank founded in 2014 and based in the United Kingdom. Starling recently launched the country’s first “banking-as-a-platform” APIs for businesses to develop unique retail banking payments services.

“Open banking was really put in place to drive transparency around options,” said Megan Caywood, chief platform officer at Starling Bank. “Customers want products that are customized, personalized and intuitive.”

Need for security and trust

The active fintech space is not merely confined to small, disruptive startups. Large tech companies are jockeying for seats at the digital banking table as well.

Cisco Systems Inc. has been working with its customer base to adopt software-defined connectivity and virtualization tools which can enhance bank branch services. Cisco’s Blockchain Platform is designed to allow developers in many fields, including fintech, to create new apps and integrate multi-vendor devices.

However, all of this comes with a mindful eye on banking security while dealing with the challenge of juggling multiple standards and APIs. “It’s necessary to instill the same kind of safety and trust,” Al Slamecka, financial services industry lead at Cisco, said in an exclusive interview with SiliconANGLE. “All the parties involved want to get to a point where they can deliver a greater measure of value.”

That value starts first and foremost with the customer who increasingly demands a convenient and frictionless financial experience. The simple act of moving money from one bank to a retail merchant or between banks can be anything but easy, thanks in large part to a maze of government-imposed regulatory rules.

Big bets in India

Some countries have not just cut the red tape, they’ve blasted through it. An example of this can be found in India where major players such as Amazon.com Inc. and Google LLC have facilitated digital access for its users to every bank in the country through the Unified Payments Interface or UPI.

UPI is a real-time payment system developed by the National Payments Corp. of India and overseen by the country’s Reserve Bank. It allows mobile apps to take payment directly from bank accounts, putting a dent in market share for global card companies such as Visa Inc. and Mastercard Inc.

In September 2017, Google launched its Google Pay app around UPI and has not been disappointed in the results. The company has seen Google Pay reach 30 million users and 1 billion total transactions in the first year, according to Caesar Sengupta, vice president of Google’s Next Billion Users team.

“We took a big bet on this payment network,” Sengupta said. “This best represents where we believe Google Pay fits in.”

Despite fintech’s evolving influence, users waiting for the killer app that will dominate the market should probably look elsewhere. This reality is driving the spirit of collaboration so prevalent at Money 20/20 this week.

One executive who has learned the importance of collaboration to build a new business is Richard Branson, founder of the Virgin Group, who spoke during the conference’s Monday keynotes. “If you’re going to take on a giant, you’ve got to be much, much, much better than them,” Branson told attendees.

Fintech might not yet be much better, but it’s finally learning to play the game.

Photo: Mark Albertson/SiliconANGLE