John Dorval, head of innovation at insurance giant John Hancock, said startups and financial firms could do a better job of working together more efficiently.
One issue is around startups lacking an understanding of the underlying issues financial firms face, despite having technology capable of offering a solution.
Large financial firms, meanwhile, could do a better job cutting down on the red tape involved with testing fintech products.
The growth of the financial technology sector has exploded in recent years as startups look to solve problems for large, slow-moving financial firms in innovative ways. But one executive at a nearly $500 billion insurance firm said both sides could be working with each other even more efficiently.
Steve Dorval, head of innovation and advice at Boston-based John Hancock, told Business Insider in an interview Thursday there are several issues startups face when trying to solve problems for big banks and insurance companies.
Dorval, who is also the president of John Hancock’s personal financial services, said entrepreneurs don’t always see the benefits their products might offer large, complex financial firms because they lack a full understanding of the problems these companies face.
“There are a lot of companies and startups out there that don’t realize that they have solutions that could feed the needs of what we want in terms of how to help make us more efficient,” Dorval said. “You’re a 25-year-old PhD coming out of MIT and you haven’t worked in a large financial services industry [firm]. You might have no idea that XYZ is hard when it seems like it should be just routine for someone like us.”
Startups have done a good job of addressing issues visible to the general public. Dorval pointed to reduced trading fees and renters insurance as examples of fintechs developing ways to do something in the industry cheaper and more efficiently through technology. It’s a common origin story in the space, he added, of an entrepreneur looking to address an issue he or she personally faced.
However, financial firms face other challenges not seen by outsiders that young startups might not even understand.
“There are still large financial services organizations that are dealing with faxes,” he said. “There are probably entrepreneurs that have never seen a fax machine. How do you know to solve a problem for an issue that you didn’t even realize existed in the world anymore?”
Financial firms carry some of the blame as well, …read more
Source:: Business Insider