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WealthTech Insights #77 with Edouard Legrand. Differences between Startups and Enterprises: More Constraints or Opportunities?

Interview with Edouard Legrand,
Global Head of Digital at BNP Paribas Asset Management

Huge enterprises such as BNPP have a lot of duties to their customers. For that reason, the acquisitions of FinTechs are complicated due to long due diligence processes and negotiations. Nevertheless, such companies still need for new features and innovation, so only modern, quickly evolving startups can help them implement these.

In this article, Edouard Legrand, Global Head of Digital at BNP Paribas Asset Management, describes the constraints and opportunities enterprises have and how can they deal with them.

Build or acquire?

BNPP chooses a mixed approach to bringing in development resources: they combine the forces of a small in-house team and Gambit, a recently acquired FinTech startup. The company now implements technical innovations into the BNPP AM platform. Based on the task they’re given, they lessen or grow the resources necessary to accomplish it.

“Most of the coding is coming from a startup that we are working with. It provides the resources in a package. We say, ‘We want you to deliver such a project,’ and then they will deliver the guys doing the coding.”

People from the in-house team work directly with those who are external, and together they deliver a solution. That doesn’t prevent BNPP AM from also working with FinTechs or startups for different needs by taking a stake in those companies.

“With Gambit, for instance, we started to discuss and to work together, and at some point, BNPP AM decided to take over Gambit, so we bought the FinTech.”

Why staying Agile is the biggest challenge

Legrand says when they find something that looks interesting, they can be in touch with those companies and then decide whether to work with them. The complexity is that they have a lot of constraints as a banking group.

“We don’t want to acquire too often because my team and the two teams that are used to working on technology or digital have acquired Agile, but the rest of the organization is sometimes a bit slower to keep the pace. If you come up with some new FinTech or some new startup every two days, it will not work.”

According to Legrand, keeping Agile is also important because sometimes it’s very easy to grow quickly, but one can have a big meltdown a few years later because they forgot something important or the platform turned out to not be robust enough. The right way is to find the right balance between those two.

“We are smart enough to build an open ecosystem so we can create some bricks on our own, or we can buy some others from FinTechs or partner with them. Finding the right balance to work together is not easy because the list of processes and constraints can be overwhelming. If you grow too fast as a startup, it will not work either, because you have a duty to your clients.”

Startups need to make sure they understand how enterprises work so they can adapt their communication and the way they handle things to fit into the processes.

Enterprises and trends

Machine learning and behavior analytics are trends today for every wealth management company for a reason. Legrand says it’s quite difficult to efficiently apply ML to retail and end clients, so they are focused on institutional clients and distributors. Still, once applied, ML can have great prospects for the business, he believes.

“We have market data—we have so many things we can use to determine signals or some sentiment analysis on what people are thinking about the companies.”

Big enterprise companies like BNPP need to develop a more customer-oriented approach. Legrand says the fragmented access to clients’ data on the European market currently prevents these companies from making services focused on the customer.

“Today, we can do that, but it’s a bit difficult because accessing the data is fragmented. Even if the advisor has known the client for a long time, sometimes he or she doesn’t have all the parameters. Technically speaking, finding tools and ways to help with the process information to make it work—I think that’s an area we should work on.”

Takeaways

Even though big enterprises have some constraints in choosing vendors and partners, they also have enough power and opportunities to keep up with the market. Acquiring or partnering startups can become a mutually beneficial deal for them—if applied with skill.

About

Edouard Legrand leads the team that develops applications and websites for BNP employees, analyzing sales trends, implementing digital solutions, and working with FinTechs to coordinate among group entities. He took his role after serving various management, marketing, and product strategy roles at BNP Paribas. He now heads the digital team on his own.

Edouard Legrand, Global Head of Digital BNP Paribas Asset Management

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Interviewed by Vasyl Soloshchuk, CEO and co-owner at INSART, FinTech engineering company. Vasyl is also the author of WealthTech Club, which conducts research into Fortune and Startup Robo-advisor and Wealth Management companies in terms of the technology ecosystem.

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