Stuart Cook of Valley Bank.

The evolving role of fintech in the U.S. financial services industry

“It’s time for banks to do more than just say they’re going to ‘embrace fintechs’. It’s time to look within the organization, at the people and strategy in place, and build from within a successful startup mindset,” writes Stuart Cook, Executive Vice President, Chief Product Officer for Valley Bank

Fintechs don’t need to be embraced by legacy banks—they need legacy banks to treat them like a partner.
I spent a majority of my career growing fintech startups. I know what it’s like to be on the side of the business where you find a problem facing banking customers and work tirelessly to solve it by creating new, innovative technology. I’ve also experienced what it’s like to try and partner with legacy banks to get your product off the ground; with all the red tape and hurdles of getting through the vendor management process. And in the end, that’s often how you were treated—as just another vendor.
For legacy banks to thrive in today’s evolving industry, with fintechs playing a major role in transforming financial services, they need to design an operating model that understands how fintechs work and be the strategic partner these startups are looking for to help them commercialize and be successful.
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Stuart Cook Valley Bank
Stuart Cook Valley Bank
Stuart Cook of Valley Bank.
(Valley Bank)
How do banks do this? We may be talking about tech, but really this is about people. It’s really important for banks to ensure they have people in the organization who understand the fintech ecosystem and how to construct win-win wins—win for the bank, win for their customers, and wins for the fintech.
When I arrived at Valley Bank, after years of being in the startup space, we knew that for Valley to continue its trend of strong growth it would need to embrace the fintech ecosystem. Our challenge, like most banks, is how to upgrade legacy systems and expand our technological capabilities to solve customer problems.
At Valley we have a number of people that ordinarily you would expect to find in a fintech. Why are they with Valley? They are empowered to operate and think differently about how to solve problems for customers; embracing open platforms and fintech solutions that allow us to move quickly and iterate. People with startup and fintech backgrounds have a strong understanding of how these businesses operate, what their pain points are when it comes to partnering with legacy banks, and who can serve as a catalyst within the organization to foster and embed these partnerships.
Banks also need to use their size and financial strength to help fintechs succeed, not just within their own ecosystem, but even beyond. By taking a strategic approach to investing in fintechs, banks can align incentives for success with their fintech partners.

We at Valley are looking for ways to nurture the startup ecosystem and help these startup companies grow and thrive. Our recent investment in The Garage, a venture capital fund that builds and invests in early-stage startups in the fields of fintech, AI and cybersecurity, is a good example of that. Together with The Garage, we’ll be able to bring the vision of these aspiring startups to life by accelerating their access to the U.S. market and providing the banking solutions they need to be successful.
As partners, banks can validate product market fit and help inform the product in early stages, before formally launching into the market. It’s a win-win for the bank and the fintech because by testing new technologies and improving CX and overall level of service, our customers receive a better experience and our fintech partner enjoys a shorter road to success.
Fintechs are not going anywhere. Lots of startups fail, but with so many opportunities to make financial services better for people and businesses, there will always be winners. It’s time for banks to do more than just say they’re going to “embrace fintechs.” It’s time to look within the organization, at the people and strategy in place, and build from within a successful startup mindset. By doing this, banks will develop a culture that values what a fintech can bring to the organization and provide the resources and guidance to help their fintech partners grow and be successful.
Stuart Cook is Executive Vice President, Chief Product Officer for Valley Bank.