How to Get BaaS Providers to Pay Attention

You are a fintech founder. You've spotted a gap in the market and have come up with a venture to fill that gap. It's clear as day to you that if you can launch an account/card/lending solution/payment acceptance for problem X in Market Y then you will have struck gold.

You (hopefully) do your research on how to build it, how to commercialise it and start identifying what to build. Pretty soon you start to realise the build is actually significantly bigger than you thought. And as the business will be handling, processing and storing customer money, you are going to need to obtain a licence. Buying or applying is not an option as you don't have the time or budget. So your only option is to find a partner who can grant you some kind of use of theirs.

It starts feeling like a little bit more of a challenge than you originally thought, so you have a brainwave. "There's gotta be some providers in market who solve my problem right?" And you'd be right, there are. So you contact them, keen to show them the opportunity of a lifetime to have the chance to power you as a new customer and get paid for the privilege of delivering this to market.

But for some reason, the vendors you contact don't seem to agree. Some never reply. Others politely decline. A few take the meeting, smile, nod, ask a handful of questions and then disappear. You walk away wondering whether they were ever interested in the first place.

Have you ever wondered why? Why does the company you're trying to buy from seem completely uninterested in selling to you? After countless calls with Banks and BaaS partners, Acquirers/Issuers and whoever else you contacted, not a one of them seemed A: interested in having you as their customer or B: even bothered to respond after your call. If you are lucky enough for them to even take a call, you see them holding yawns back and scrolling Instagram while you pitch your heart out.

Even the ones that do respond seem to be "phoning it in" — not really interested. Then, despite your best efforts, you simply can't seem to get a commercial offer from them.

I mean, imagine walking into any store anywhere in the world, and not being able to buy the items on display. It seems crazy. What's worse, you start to realise it's the kind of store that… doesn't have price tags.

It all starts to feel a little like that scene in Pretty Woman. You know the one, where Vivian walks into an upmarket fashion store in Beverly Hills, the attendants turn their nose up at her. And then proceed to tell her that this store isn't for her and she is unceremoniously booted out of the store.

If that feels like you and you've read this far, we have prepared a guide on what you need to do. From the absolute basics to the expert. I'm here to tell you why that happens with Banks. And how to fix it.

The first thing to address is perception. Because more often than not, the problem isn't them. It's you. You aren't buying candy from the 7-11 here. And attending a call with that attitude often shows. You are buying something that is heavily regulated, or adjacent to something that is heavily regulated. And the bank and its sales team know they can't just sell the goods to anyone. They have to do a huge amount of vetting across a wide range of parameters.

Banks and Fintechs don't sell nuts and bolts. They don't sell bottled water or clothing. They sell control of other people's money. And with that control comes an order-of-magnitude greater responsibility to ensure these products are in the hands of people who understand that. Moreover, they are selling something that can't be turned on and off like a switch. Therefore, they are going to (ideally) work with you over a long period of time.

That means there is an investment on their part to deliver something in perpetuity to you. And as a result, in the back of every partner bank's mind is a multi-layered calculation. They are weighing up a large number of variables.

While you're pitching...

Here's what's running through their head.

• Does this founder understand regulation?
• Can they protect client money?
• Does the product actually make commercial sense?
• Can they raise enough capital?
• Do they understand distribution?
• Will they survive two years?
• If this business fails, who's looking after the customers?
• Would I trust this person with my licence?

In short — is this person/team of people/idea "backable"? In other words, if they choose to sell their product to you and support you to deliver it to market, are you going to be in it for the long haul? Or, when the going gets tough, are you going to be able to handle the challenge of running a regulated financial product?

Too often, well-intentioned Founders and their fintechs go bust. Whether it's too much competition, lack of traction, burn that's too high, regulatory shifts, or just plain poor execution, there is an ocean of reasons why Fintechs don't make it. And in this ocean, like a ship sinking, like the Titanic hitting an iceberg, it will have passengers that must be rescued. Just because your fintech is sinking doesn't mean your banking partners and vendor supply chain don't have a duty of care to rescue your customers. These people hold balances of their most precious of assets — money. They need to be protected, communicated with, and managed when they are likely to be highly stressed about losing access to their money.

And while you, the Founder, are likely suffering from your wounds, that same supply chain is trying to staunch their own. (They usually lose out financially when this happens.) Whilst at the same time helping potentially thousands of passengers to disembark safely. And don't forget that while doing all of this, they have their own businesses to run.

To make matters worse, these events typically see the supply chain out of pocket. Most start-ups that go bust do so as a result of a lack of capital. Rare is the founder who throws in the towel with adequate capital to make all partners square. And in the worst cases, sometimes through desperation, founders commit the cardinal sin of using client money to fund their own costs.

So, when you are talking to a bank provider, know that on your first call, the vendor is battling this internal struggle between wanting to serve you and wanting to ensure they protect their own business. And to avoid the scenario above, which doubtless they will have encountered more than once.

So… how can you put your best foot forward? How can you build the confidence and trust of the battle-scarred fintech that sees you in the latest line of new recruits that likely 'ain't gonna make it'? Well, there's quite a lot you can do actually.

First Impressions Matter (The Basics)

Well, for starters, there are some pretty basic steps anyone can take to be taken more seriously. I will caveat that yes, these are basic — hence under the BASIC header — but you'd be surprised how many people get these wrong.

First off, respect the fact that this is a professional call for a professional service. I can't tell you the number of times I've had a call with a founder who hasn't bothered to turn their video on. You are asking a regulated entity and a total stranger to trust you with their most prized asset, their licence. That is no small ask, and it requires confidence and trust. Trust is built and earned over time, not granted for free. If your video doesn't work, then at least acknowledge it on the call rather than go ahead under the cloud of anonymity.

Don't email or book meetings from a personal email address. If you haven't even bothered to pay the 10 bucks to set up a corporate email, you are signalling that A: you won't be able to pay the vendor, B: you are using the vendor as a free consultancy rather than a potential supplier, and C: you are in no way ready to consume their services.

Preferably have a website that they can view (the first thing they do when you email them is try to research your business, and the first thing they look for is the site). If you don't have a professional email and don't have a website, there is really little the supplier can do to perform any kind of diligence on you as an entity. And as I explained before, this is not a 7-11 store; they can't sell to just anyone.

A clear picture of the product you want to launch and a clearer vision of the problem it's going to solve. I can't tell you how many times somebody has told me they want to offer accounts and cards to their customers. And when I ask "Why?" they simply don't have a well-thought-out answer. As often as not, the response is a vague and generic "if-we-build-it-they-will-come." I hate to break it to you, no they won't. Or rather, the people who will come won't be the kind of customers you (and certainly not your banking partner) really want.

You can really help your chances by A: validating the problem you are trying to solve and B: refining your offering.

If it's an account, you should be able to say it's an [INSERT TYPE OF] Account that [INSERT TYPE OF SERVICE] for [INSERT TYPE OF CUSTOMER]. An example — It's a Corporate Account that helps to automatically categorise spend to make tax filing easy for freelancers and small businesses.

That one description does three things. First, it proves you've (bothered to and) identified a real problem. Second, it shows you've thought beyond "accounts and cards" and turned the ingredients of banking into a product. Third, it helps the vendor quickly decide whether they can actually support you.

This description helps the vendor to subsequently validate at a high level the commercial opportunity and then filter out any business models that don't meet their risk appetite. And lastly, if they like the look of you, there still may be technical gaps in their offering. The clear descriptions allow them to identify any key technical (or other) blockers that they (or you) would have to solve to be able to support a full launch.

By describing with clarity your desired offering, you help your vendor to take you more seriously and also engage them by helping them to be able to qualify whether or not they can actually support you. Many Banks and BaaS providers have the same outward-facing products, but beneath the API docs and product brochure, there are hundreds of nuances that make you a serviceable or non-serviceable customer. Getting to this point as fast as possible ensures nobody wastes more time than necessary.

Show you understand the business

If you want to be taken seriously from the first call then it helps if you've operated in the industry before. So go and get a job in fintech. If that's not an option :) then at least be prepared. Research your market.

Don't just explain what problem your business solves, explain how it makes money! Explain how it will find its customers and attract them to make them make money! Many founders can and do have a clear understanding of the problem they want to solve. But those same founders lack clarity on the economics of it and the path to profitability. A founder who knows the difference between corporate and retail interchange (the kickback the card schemes offer for using their cards) is significant, and often this single detail can be the difference between profitable and unprofitable.

Know your customers. You should be able to describe (in excruciating detail) who or what your target customer is. How you can win them. And how you can keep them. How you can expand your revenue over time and, crucially, what is the minimum they need to use you in the first place. This builds trust with the vendor that you are capable of delivering their licensed product and stewarding it carefully for the desired market. You also need to know what a bad customer is. The ones you don't want either because they are not a customer you can deliver value for, or they are simply too high a risk for you to want in the first place. Knowing what a good customer looks like for your operating model is half the battle.

Know your competitors. Any founder launching a product wants to think their product is going to be unique. The reality is if that was truly the case, it's a leading indicator of your idea lacking product-market fit. The market is (generally) efficient and people, as a rule, don't like to leave money on the table. Therefore, if there was a way to make money from it, it's highly likely that it has already been tried. If it didn't work, that's usually (not always) an indication that it's not a product that delivers enough value to get paid for. In fact, if the idea does exist, it's usually a good indicator. No vendor has 100% penetration in their market. And even if they did, markets grow and needs evolve over time. Entering a market that has many participants is no bad thing. Having a baseline competitor to compare to helps to validate your idea in the mind of your supplier. It also helps them to overlay a framework of what it looks like and makes their risk decisioning much more straightforward. A nebulous idea that sounds good in theory but is hard to pin down on paper just makes the risk decision a bank makes that much more challenging. In addition to this, thinking your product is unique and then (after you have spoken to your desired banking partner) they list off 5 competitors shows that you haven't thought this through and that you are unprepared. Not what you want.

Know your Vendor. In the age of AI, it's really not too much to ask to do some pre-vetting of a vendor's product. Spend twenty minutes with AI before you spend twenty days speaking to the wrong vendors. For example, if you want to launch in Region A — ask an AI: does Vendor X have a licence to service customers in Region Y. You can often go to the Bank's website, scroll to the footer and copy-paste the regulatory boilerplate into an AI, and then ask it questions on whether they can support your intended model. You can even go to the regulator's website and check what permissions the bank/vendor has. In the UK for example, an Authorised Payment Institution is not able to indefinitely hold client funds where an Electronic Money Institution is. If your business relies on receiving and holding client funds with a clear instruction on what to do with them (convert currency/pay supplier etc…) then you don't want to waste your energy on vendors who can't support. Review the vendor's website and look at the programs and types of clients they support. If you see a high volume of B2B, you can guess that's their preference or their offering is geared towards it. Launching a B2C product? Then maybe put that vendor lower on your list. Call their clients and get references. Sign up for the product of one of their customers and dog-food it. The more information you have, the better.

Protip — if you want to launch in a different market, use a VPN to move your IP to that market, and then go on the same vendor's website. They often have different footers depending on territory.

Show, Don't Tell

By definition, an expert is somebody who has expertise. It really does go a long way to build confidence in a Bank/BaaS/Critical vendor that you know what you are doing. If you don't know (as you haven't done it before), then preparedness is key to showing you can develop expertise.

You need to be able to demonstrate that, in the absence of experience, you have extreme competence. The way to do this is show, don't tell. Anyone can tell a bank they understand payments. Very few founders can put an account structure, a flow of funds and a vendor map on the table. Those documents instantly change the conversation.

Account Structure. Design a simple Chart of Accounts. You don't need to be a trained accountant to have a basic understanding of what kind of bank accounts you will need to service a fintech program. Account A for operations. B for client money. C for suspected fraud, etc. Once you have built an account structure, you can then map a flow of funds through this structure and A: see does it actually match what happens in your head and B: show your banking partner how you intend to use them. This allows them to make quick and early comments on whether they can technically support it and also get comfortable with the flow of funds.

Flow of Funds. Show that you have given serious consideration to how you will handle your client money. You are most likely going to get it wrong if you've never done this before, but just showing a Bank a flow of funds sets you miles ahead of the game. Most founders don't even think about this, and it becomes a blocker later down the line. Banks typically will offer you some kind of header account for you to manage your operating costs. And separately, they will offer you a client money account. In your flow of funds, it's important to differentiate between these and make sure any revenue-generating events are clearly defined, as those are the moments that transfer your liability of protecting client money to your asset of recognising revenue. Even a single penny/cent misreconciled here is a very bad thing. Ensure that your flow of funds can enable all intended activities the business and its customers will attempt.

Scenario mapping. You can broadly break this down into Onboarding, Servicing and Offboarding. Being able to show your BaaS partner that during each part of a customer's journey you are able to account for where the data is being sent, how you will handle it and crucially which parts of that journey touch the bank will go a long way to building confidence that they can support your model and that, more importantly, you can manage it. As an example, when onboarding a user, the bank might want to know what data you collect, how you verify it, what tools you are using to verify it and once verified, how that data is landing with them. Some banks may even require to do this themselves, but the fact that it's entered your consideration is another data point that shows you are capable of handling a complex fintech program.

Vendor Mapping. It doesn't take much effort to realise that most banks can't/won't do every part of the puzzle for you. Whether it's the User Interface, the card issuing/processing, the transaction monitoring, the rewards, loans, marketing, KYC/B, Fraud Monitoring, Card Tokenisation, 3DS and on and on. Fintech is an ecosystem, and you need to coexist with multiple vendors within it. Showing you understand that the Bank does, and where they will fit into your ecosystem, conveys to them that you both understand the scope of the endeavour you are about to embark on, and you can navigate it. Different regions have different standards and regulatory approaches. The same problem can be and is solved differently in Europe vs the USA. Knowing the vendor ecosystem is crucial.

Bonus Tips

Whilst not crucial early in conversations, it's always helpful to have:

1. Budget — secured is best, but if not, planned is essential. Banks want to know that you have some vague understanding of the cost of running your business (of which they will be a significant line item).
2. Organisation Structure — Banks won't support one-man bands. You need to ideally have a team in place. If not, have a clear ideal org structure that you can make sure you can fill as part of your research stage. (Make sure you are filling compliance, operations and fincrime!)
3. Make sure your website works!

Conclusion

The biggest mistake I see founders make is thinking the first meeting with a bank is a sales meeting. It isn't. It's an interview.

You're asking another company to trust you with its licence, its reputation and, ultimately, other people's money. The good news is interviews can be prepared for.

Turn up with a clear product, a realistic commercial model, a flow of funds, an account structure and evidence that you've done the homework, and you'll answer most of the questions before they're even asked.

That's usually the difference between "We'll get back to you." and "Let's talk about how we launch."

So prove yourself!