Startups

7 things startups should know about selling to banks

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Startups feed on sales, but selling into banks and financial institutions is a different story. The process could take months, if not years, with many hoops to jump through, including procurement, compliance, multiple stakeholders, and organizational changes. Surviving this gauntlet requires a targeted approach grounded in real business needs.

In a recent webinar, Paul McKinlay, Managing Director of Innovation Banking at CIBC; Keith Gordon, Chief Security Officer of CIBC; Tom Mildenhall, Global Head of Technology Business Development at Bank of America; and Corey Gross, founder and CEO of Sensibill, shared the seven things startup sales leaders need to know about selling to banks.

1. One bank does not fit all

Just because you built a product for banks does not mean you can sell to every bank. Each organization is likely to have its own priorities and objectives in the market based on size and bank type. Instead of trying to catch them all, Gross recommends founders start by reading a bank’s annual reports and interviews with executives to understand its publicly-stated goals. From there, see which goals align with what your product delivers. If the public statement route is not yielding any insight, look at the bank’s recent acquisitions, as that could give you an indication of whether the bank is an early adopter of new technologies.

Once you know which banks might be a good fit, Gross said the next step is identifying the right person to reach out to. In specific, seek out the person whose job it is to handle the problem your product addresses. For this search, Gross said to not be afraid to tackle different “altitudes” of titles – just make sure you’re speaking at the same altitude. For an EVP or C-suite level, talk about the bigger vision and costs versus ROI. For an execution-focused role like a senior manager, focus on integrations and the on-the-ground way the product solves the problem.

2. Get ready to ask and re-ask

Things can change every quarter within enterprises, and banks are no exception, so you’ll have to ask and re-ask the same questions to ensure priorities still align with your offering. Gordon suggested a very clear line of questioning to assess commercial intent: if there’s still budget to solve this problem, if solving the problem is still a priority, if any new decision-makers need to be involved, what success looks like now, and whether the company is using a different RFP or procurement process than before.

If you can’t get a clear answer that the problem is still a priority, Gordon said to consider asking if you should cool off the conversation and come back later. It might be frustrating for startup leaders that want to move quickly, but taking a few months off then coming back means no wasted time in meetings that go nowhere – and wasted time can be death for a startup.

3. Know that bank leaders talk to each other

Gordon said there are many ecosystem-wide issues like cybersecurity or regulatory compliance that all banks need to think about. As a result, there’s a “bandwagon effect,” said Gordon, where if one bank has a thorny problem figured out they are likely to share their solution with others.

Use this to your advantage as a founder. If you approach the right types of banks for your solution and focus on developing a close relationship, a lot of word-of-mouth advertising will happen on your behalf. You will also benefit from turnover: bankers often move from one bank to another throughout their career, meaning that as someone progresses in their career they can champion you at different institutions.

4. Stop cold emailing the C-suite

Gordon and Mildenhall both said they delete almost every cold email they get. For the ones they don’t delete manually, Gordon said he has an email filter set up to automatically delete cold reach outs before he even sees them.

With that in mind, Mildenhall was very clear: “Find a warm intro” if you need to talk to the C-suite. Focus on building relationships with the department leaders who report up into the C-suite leader you need to talk to. When done well, these people can champion you to their executive and provide great insights about any shifting priorities in the business.

5. Don’t jump (too quickly) into proofs of concept

Proofs of concept can be valuable, but Gross said to be cautious because they take up time and money for both parties. Further, said Gross, proofs of concept should be a last resort.

Mildenhall agreed and said that proofs of concept need clear success criteria, clear milestones, and clear direction about what happens after the proof is done. If the proof is successful, what are the buying criteria? If it’s not, what remedying steps can you take, or is the deal done? These are just some of the things that need to be figured out before agreeing to a proof of concept.

6. Avoid innovation tourists

Mildenhall cautioned startups against taking any meeting they can get. He said there is a lot of “innovation tourism” at banks where people have roles that aren’t connected to organizational priorities, objectives, or budgets. So while they take lots of meetings with startups, they can’t actually make a decision about working with you or champion your solution internally.

To avoid these meetings, Mildenhall recommended vetting yourself first against the organization’s needs. If it’s obvious that you can’t help them, politely decline the meeting. Or, if you think it could be a good networking opportunity, take a meeting but don’t go further than that without a clear commercial intent.

“You have to be careful you don’t get sucked down into 10 meetings with someone who wasn’t going to buy anyway,” said Mildenhall.

7. Avoid creating your own red flags

In any sales process – let alone cautious industries like banking – the last thing you want is to create your own red flags.

Mildenhall shared the red flags he’s seen over the years that instantly turn him off from engaging with a startup:

  • Startups that claim they can solve any problem, instead of focusing on the value they truly can deliver.
  • Selling services when you position yourself as a tech/software company.
  • Claiming to have big-name customers when in reality those customers are just on proof of concept trials.
  • Trying to sell a complete product when in reality your startup is still in the development stage.

When banks partner with a solution provider, they are looking on a multi-year horizon because it’s difficult and inconvenient to switch solutions. Startups need to think this way too, even if it’s counterintuitive to the startup mentality of scaling fast. Do whatever you can to speed up the purchasing process by making sure you’re targeting the right organizations and connecting with the right people, but from there you have to settle in for the long haul.


Go here to watch the full “Selling into Financial Institutions and Regulated Enterprises” webinar.


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