Should Banks Use Matchi To Strike Up New Relationships?
By Alex Kwiatkowski, FusionWire, 6 November 2015
Online dating is big business. Current estimated annual revenue is in the region of $4bn per annum, and there are thousands of firms engaged – if you’ll pardon the pun – in matchmaking activities. For the uninitiated, sites range from generalist to, ahem, specialist, and all manner of proclivities are catered for. Services are predominately focused on connecting individuals, but there are some notable exceptions. Where banks are concerned, there’s even a platform designed with their unique needs in mind: it’s called Matchi, and was created to connect established institutions with a selection of digital fintechs to “establish collaborative relationships that deliver increased return on investment for innovators and banks alike".
Matchi has been in existence since 2013, was founded in Hong Kong, and is privately held. However, its activities are not solely confined to Asia, as reflected by a diverse customer base that includes UBS, Bank of Queensland, Sberbank Labs, American Express, OCBC, Bank Respublika Azerbaijan, Standard Chartered, Barclays, AIB, Standard Bank, ANZ, Caixa Bank, and Bank Hapoalim. In other words, top tier banks you’ve probably heard of, rather than plucky – but obscure – players from the lower reaches of the industry.
Matchi’s business model is simple. Participating banks pay an annual membership (currently $29,950). The fintechs can either pay a fixed fee ($7,450 p.a.) or allow Matchi to take 5% commission on revenues from any deal with bank for the first three years. Certain limitations apply: for example, fintechs with a yearly subscription can submit an unlimited number of innovations to the platform, whereas those who opt for a ‘no cost/pay on success’ approach are restricted to using Matchi to showcase just one idea.
In addition to this, institutions can purchase a sponsorship package (based on a 36-month commitment), which gives the ability to get early sight of the latest innovations ahead of them being made more widely available on the platform. Sponsoring banks can prevent rivals from seeing a particular product or service, and are then able to negotiate a deal without fear of it being stolen from under them by a brazen rival.
And it’s not just banks that are able to potentially leverage Matchi for commercial gain. In August 2015 KPMG became an alliance partner, and will “work with financial services clients to access the benefits of fintech innovation that is taking place globally, using the Matchi platform to identify quality opportunities and advising clients on how to execute and deploy new solutions into the marketplace.”1
So, what’s the catch? If there is one, it’s not immediately obvious. With over 12,000 fintechs in the world, and a large number of financial institutions seeking to improve the way they operate for the benefit of customers, regulators, investors and employees, Matchi has a substantial amount of potential users to place upon its platform. The associated annual fees aren’t outrageous either, and both fintechs and banks are likely to get decent value from their respective investments. Is matrimony guaranteed? No. But Matchi doesn’t make any guarantees of wedded bliss. Of course it’s conceivable that somebody else could replicate Matchi’s idea – there are a multitude of copycat personal online dating services – but for now the company has a competitive advantage to exploit.
Deciding to join an online dating site can require a leap of faith. Banks should be willing to jump into the unknown, as it gives them a better chance of finding innovative new solutions which aren’t just technologically interesting but commercially viable. Matchi provides a forum where they could strike lucky.