For years, the nature of business has been to out-compete one another to be the best. Similar to that of the Spartans in the colosseum, out-muscling and out-manoeuvering one another until there is only one left to claim victory.
However, the startup scene has changed this, allowing young and new businesses alike to muscle their way in through innovation and ultimately coexist. Larger businesses and corporations have become complacent, with the ground shifting beneath them, leaving gaps for innovators to manoeuvre their way to a position within reach of the everyday consumer.
Larger businesses and corporations have however chosen to respond in a way that has come at a surprise to many competitors and small businesses working in the same space.
Rather than out-muscling small business with bottomless pockets and massive marketing campaigns, they have chosen to collaborate and share common competencies to offer consumers a better product or service. Although an unexpected evolution of modern-day forward-thinking, businesses have, in general, reciprocated and embraced the proposal.
How fintech is leading the way
The financial technology (fintech) community is one of the industries that has chosen to embrace these partnerships to share core competencies, with some partnering with larger banks and accounting software brands to meet the market’s current demand for product and convenience. Many of these collaborations have formed as a result of unmet potential or absence of skill or innovation in particular areas of a company.
Open APIs (application programming interface) are a great example of this. Many businesses have chosen to develop products and services, and make their technology collaborative. An example of an API at work is how you can use your Facebook credentials to log into different websites, and auto-authenticate your details.
Facebook has chosen to make this user experience seamless, through a simplified permission-based API process. The user’s details are securely shared to another application, and pulls these details to help complete information fields and preferences.
Open APIs are also evolving to create a new user experience in the financial sector. Likewise, smaller financial services are advocating for users to share their financial details in an endeavour to make transactions faster, more secure and easily understandable for the everyday user.
This form of collaboration has been key for small business in an era where convenience and speed are big sellers to millennials. By having open APIs, it allows the user to streamline logins, processing and data entry and is typically positively viewed by the end user for reasons of both security and convenience.
Collaboration is survival
Small businesses finding and sharing core competencies is a boon for smaller businesses looking to grow. Using the competitive advantage of another business, to the mutual benefit of both, is a legitimate strategy being used to leverage products and services further in the mindset of the consumer.
Businesses such as Collabosaurus has seen the potential in this strategy, and has built a matchmaking service around connecting businesses to share and leverage each other’s successes. Everything from brand partnerships and cross-promotional activity to branded lines or versions of product has been explored, and provides a treasure trove of ideas for growing SMEs looking to innovate in this way.
Collaboration is also being used by much larger corporations to break into new demographics, in an effort to be associated with particular niche brands so as to increase awareness within specific minority groups. Large tech companies such as HMD Global have even explored this, collaborating with Nokia to inherit their reputation for delivering a sturdy and robust mobile phone.
Similarly, banking institutions and fintechs have recently joined forces, such as Heartland Bank in collaboration with online alternative lender Spotcap. In exchange for providing a funding facility for their Australian operations, Heartland Bank has the opportunity to knowledge-share to refine its own digital distribution strategy for its suite of consumer and business products.
Collaboration has been key for both of these businesses’ development, and has proven an excellent precedent for how banks and fintechs can successfully work together.
For small businesses to survive in the current innovative environment, they require more than just a different product offering or marketing campaign to be noticed by the everyday consumer. The most effective way to tackle traditional business and gain traction in the market has been a coordinated mixture of strategies, meaning that a multifaceted approach through sales, marketing and advertising has typically been key.
However, businesses are becoming more aware of ways to shortcut this, utilising new-age collaboration and tech ideas to drive the success of a brand and differentiate them in a crowded online world.
Lachlan Heussler is an experienced entrepreneur and innovator with more than 15 years’ experience in financial services with Deutsche Bank, UBS and Citigroup and is now Managing Director at Spotcap Australia and New Zealand.