Playing The Pivot


Though it is the NBA playoff season, this post is not an analysis of how the biggest men in the professional basketball world ply their trade.  Instead, we want to focus on a recent Bank Innovation blog by JJ Hornblass entitled Why Bank Innovation Start Ups Need To ‘Pivot’

JJ’s main point is that to survive and succeed more and more FinTech startups must be willing to “pivot” their business models. He sites as an example “the artist formerly known as” Pageonce that now goes under the moniker of Check. Pageonce “pivoted” by moving away from being a mobile banking app add-on “toward bill payment from PFM.” 

Hornblass also documents other FinTech firms that have made similar moves, such as T8 Webware that became Banno, Bank Simple that evolved into Simple, and ZestFinance that transformed itself from a retail payday lender to a provider of underwriting analytics.

Over a year ago, in discussions with prospects, customers and analysts, it became clear to us that PFM as a standalone product was an acronym with a limited future especially in mid-tier financial institutions where on-premise solutions are preferred for customer facing applications. 

One bank we visited with, an $18 billion institution in the southeast, summarized their position on the topic in a particularly colorful way:  “We are not interested in putting lipstick on a pig? The last thing we need is another application bolted on to our legacy online banking system.” 

No one we spoke with in our target market questioned the value of offering customers PFM services However, most saw PFM as a secondary issue to the real challenge they faced.  More consumers were demanding more access and control over their money from a rapidly increasing array of devices. 

The issue these FIs felt had to be solved was how to integrate their digital financial services into a consistent, intelligent, personalized experience that was good for the customer and the institution.  Doing this with their existing OLB systems was not an attractive option.  So, at Lodo, we pivoted and began building D3 Banking utilizing our proven data analytics engine to allow banks and credit unions to achieve that goal. 

D3 Banking was launched at FinovateSpring in May 2013 where we conducted our first public demonstration of the product.  We are now busy with our next release on this “pivotal” journey, which we hope to demonstrate at FinovateFall. 

Playing the pivot isn’t easy but Hornblass is right – it is a mandatory skill for anyone in an industry like ours.  With innovation continuing to accelerate and consumers adopting new tech at a faster rather, FinTech companies may find themselves pivoting more than once.