Major Swiss banks working alongside one another is unusual. Indeed, this is the aspect of the Kickstart Fintech Accelerator that most surprises people when they first come across it. Normally UBS and Credit Suisse are seen as competing organisations, but here at Kickstart they are together embracing an emerging business concept: coopetition. So we asked Andreas Kubli of UBS and Salvatore Iacangelo of Credit Suisse to explain what’s going on here – what does coopetition mean to them?
“It means to look further than competition and to collaborate with [similar organisations] to bring out the value and potential, which is not likely achieved alone. It is competition and partnership at the same time” says Salvatore. “In a coopetition concept, questions like what are competitors doing? and how do we protect ourselves from competitors finding out what we do? are out of scope, while questions such as what can we do together to make our business better? and how can we leverage our collaboration with competition as a benchmark and measurement of our own growth?” enter into the spotlight. The same is true for UBS, which also sees value in being “inspired by players that pursue similar goals”.
Yet coopetition as a concept remains new for banks. Andreas argues that the relatively small size of the market in Switzerland fostered some early collaborations, such as the formation of SIX, the financial infrastructure provider, by several Swiss banks. Certainly collaboration is becoming more common among financial incumbents. Looking internationally, he points to UBS’ recently announced blockchain project, the Utility Settlement Coin, “a digital cash model aimed at facilitating payment and settlement for institutional financial markets. We started this project together with the startup Clearmatics and are now supported by BNY Mellon, Deutsche Bank, ICAP and Santander.”
That said, Salvatore suggests that the finance industry lags others, such as the telecoms and automobile industries, in terms of collaboration. But things are changing: “coopetition is not broadly adopted within the bank today,” he notes, “but the concept is increasingly favoured with growing acknowledgement and understanding across this business.”
This is where accelerators come in, helping to foster and facilitate this new style of collaboration. The resulting program, Kickstart, is valuable from Credit Suisse’s perspective: “many companies try to run their own accelerators, which typically have limited exposure, reach and awareness. Since this is an exercise that benefits us all, joining forces can enable the initiative to reach bigger audiences and reach its ultimate goal – to promote Switzerland as a digital hub.” This is a goal the partners share. As Andreas puts it, “we as well as Credit Suisse and the other partners have a big interest in attracting innovative talent, strengthening the local startup ecosystem and in the long run also the innovative strength of the Swiss Financial Center.”
The approach is necessary, he adds, “where international fintech locations compete as fiercely as today. Together we can attract better startups and better mentors, for example, we can define more relevant Proof of Concept Cases with startups, and there is much higher overall chance that the program will lead to the success that we’re both striving for.”
There is, however, another reason why these banks are emphasising the need for collaboration now. Somewhat ironically, it’s startups like those found in Kickstart’s fintech stream that in part precipitated this. Credit Suisse cites the combined competition from new “technology giants” and fintechs as inspiring them to join forces with other banks, giving them the “momentum and strength” to address these entrants.
Working closely with those over whom you are supposed to maintain a competitive advantage goes against traditional corporate thinking, and this can cause reluctance to explore collaborative opportunities. Yet UBS and Credit Suisse are optimistic.
Andreas argues that “there is always room for differentiation, even if such players exchange and cooperate on certain topics. …Through collaboration we believe that we can, for example, increase our innovation capabilities and our internal skills, improve our service offering or bring it to market faster, and thus serve our clients even better – and this is what makes us competitive.”
Indeed, both companies cite Silicon Valley as demonstrating how well a collaborative approach can work. For Salvatore, “Silicon Valley is an outstanding example of an area that promotes collaboration. Consumers there are well adapted to new technologies and also maintain an open mind to try new things. This encourages testing of new offerings and identification of opportunities for businesses to cooperate. Secondly, the environment (in terms of regulations) supports innovation in businesses where collaboration comes into play most often.”
Furthermore, the ecosystem that has developed in Silicon Valley gives it the edge: “there is a powerful mix of venture capital, accelerators but also big companies interested in cooperating or even acquiring startups”, says Andreas. As such, it is the cultivation of a complete innovation ecosystem that Kickstart is striving for, and what collaborators UBS and Credit Suisse are driving.
There is, it would seem, a change going on within the banks. The financial industry, Salvatore suggests, should learn from the personal technology industry: “it is clear that when companies cover an ecosystem or large portion of the value chain, there will be opportunities for coopetition. For instance, tech giants used to see owning certain IP or having a closed ecosystem to be their key competitive advantage. Although this is still true to some extent … the majority of the growth in their businesses and user base is driven by an open platform that enables innovation and development. Very often, these open platforms are also leveraged by competitors. In return, this enables the business itself to take advantage of the existing user base of their competitors… The financial industry should consider such experiences and apply similar theory to embrace the synergies of coopetition.”
To achieve these benefits, Andreas stresses, careful management of relationships is crucial. “Collaboration is always a question of good relationships between people with an open mindset. …If the set-up is done correctly and the collaborating partners both display the necessary collaborative ethos, then we believe the potential will be reaped. But of course, executing on this approach is not always easy or straightforward, as with any other approach.”
Nevertheless, it’s embracing these opportunities that will put Switzerland and Swiss companies in a strong position: “with initiatives like ‘digitalswitzerland’ and especially the Kickstart Accelerator, Switzerland made a broad leap forward during the last year. It is unique that so many partners come together and support a program like that,” Andreas says. However, he cautions that there is still more to be done to secure the gains made so far in creating an innovative environment. “In terms of government support we are still lagging behind other locations like London or Singapore where a lot of government money is flowing into directly supporting a healthy ecosystem.”
But how far are Kickstart’s partners willing to go in their support for collaboration? What if it were some of their own suppliers or partners, perhaps graduates of this diverse accelerator, who were collaborating?
Both UBS and Credit Suisse, it would seem, are fairly relaxed about this, as they expect increased benefits for all parties. Andreas refers to their current collaboration with Bexio, an online accounting tool for SMEs that connects to their e-Banking. He suggests that a collaboration between Bexio and a third party provider should enhance the functionality of its platform, and thus increase the value of the UBS collaboration
Salvatore, meanwhile, says that Credit Suisse’s approach is that collaboration between suppliers or startups is a great demonstration of “delivering the 1 plus 1 equals >2 theory”:
“There are times when it makes more sense for startups to collaborate with each other. Startups may have limited expertise and capabilities in-house, mostly focusing on their key product. This means there is a gap of expertise and know-how, unfilled with their individual skillsets. Therefore, coopetition is anticipated to drive value for all companies.”
Andreas seconds this, emphasising that “early stage startups can learn a lot from each other and profit from valuable experiences to refine their business model. Therefore programs like the Kickstart Accelerator are vital as a platform of exchange and collaboration for startups”.
“In a program like Kickstart Accelerator,” Salvatore adds, “we do not make startups ‘compete’ with one another. Rather, they are driven to focus on their own growth and progress to get the maximum seed funding. In this setup, startups are not being compared to other startups, which promotes the collaborative environment even more.” Indeed it’s in this, by fully embracing the spirit of collaboration, that the true benefit of Kickstart and similar initiatives is found.