Over the past few years, an increasing number of FinTechs have brought buzz—not to mention funds—to the market. In 2019 alone, investors poured more than $53 billion into FinTech startups worldwide, according to Forbes. Now more than ever, established companies are realizing the potential and necessity of collaborating with startups.
The DCU FinTech Innovation Center is a Boston-based nonprofit program dedicated to boosting startups in FinTech and the New England community. Just some of the benefits the Center provides include mentorship and access to a broad network of enterprises and entrepreneurs. NEACH recently sat down with Vasilios Roussos, the Managing Director of the DCU FinTech Innovation Center, to discuss the path of bringing a solution to market and the role of the Center in that process.
As Managing Director of the DCU FinTech Innovation Center, Vasilios leads New England’s largest seed-stage FinTech accelerator, where he supports and advises entrepreneurs and facilitates connections to help grow startups through product/market fit and beyond.
Vasilios brings an array of product development, venture capital, enterprise partnership, and founder perspective to the Center. Previously, Vasilios founded and sold an omnichannel B2B2C tech company that partnered with Fortune 20 enterprises. He also worked in venture capital where his firm made early-stage fintech investments in OnDeck Capital, Simple, and more. He has led digital product innovation in financial services and technology companies and helped drive product and corporate strategy for startups. Vasilios began his career in retail banking and asset management and moved on to Cambridge Associates, Dell EMC, and Village Ventures. He graduated with Honors from Brandeis University and has an MBA from Cornell University.
NEACH: Can you share how the DCU FinTech Innovation Center got started?
Vasilios: In 2014, Digital Federal Credit Union, better known as DCU, wanted to create a space and an environment to connect with FinTech entrepreneurs in the nascent FinTech scene in Boston. There were few, if any, programs like this in the country. At that time, the core question was “could fintechs and financial services executives learn, engage, and collaborate together?” By 2016, that question was successfully answered, and we began developing more formal programming and a more comprehensive application process. We narrowed what we do, who we do it for, and how we do it.
Since 2016, the program has accepted over 60 companies that have gone on to raise $300 million in funding and on their platforms and have accumulated hundreds of enterprise customers. About a dozen have engaged with DCU in some form, and about half a dozen are in or close to production with DCU or have had pilot relationships with DCU.
NEACH: What do you think makes the Center stand out?
Vasilios: I think our approach is really important. It takes a village to raise a startup.
It’s about how we do things, even more than what we do. The Center is a nonprofit, mission-focused FinTech accelerator. Our goal is to help entrepreneurs bring new and compelling FinTech solutions to market. We do that by giving them education, resources, know-how, and mentorship to succeed—and access to institutions to build those relationships to get the feedback and insight to build great products.
It’s a year-long program. We onboard two cohorts a year: One in January and one in July. The reason it takes a year is because from what we have seen, it takes a successful FinTech about that long to go from the initial proof of concept (POC) stage, where we accept them, to production.
From an industry perspective, it’s an opportunity to partner and shape a product toward a solution the industry really wants.
NEACH: What do you look for in the startups you select?
Vasilios: Management talent. It’s far and away what we look for most—more than anything else.
The reason for that is we fully expect a startup to pivot during their development. That pivot is important. It means they are learning, getting smarter, and coming up with a better solution.
That said, we do look for people who have a clear vision and understanding of what it is they’re focused on. We also seek those who are collaborative in their approach, with the knowledge to develop cutting-edge technology and get it to market in a fast and compelling way.
NEACH: Can you review the process you go through from recruiting and selecting the FinTechs, their bootcamp, and what happens after they “graduate?”
Vasilio: First, the recruiting process. It’s heavily network-based. We use our contacts to reach out for referrals. Those contacts include universities, community groups, influencers, credit unions and banking folks—everyone in that very broad ecosystem. We also do a lot of brand-building. For example, working with universities to get our name out there. Or developing and supporting events and conferences at the Center, in the community, with partners, or events like Boston FinTech Week, which we helped launch in 2017. Or we generally support FinTechs so people can get a sense of what we do. Then we do a lot of scouting and prospecting.
All this can take months. That’s because we want to bring more people into this process of helping us identify the right trends, choose the right people, and engage with our startups the right way. That will help us build the most impactful products. We also want to see founders develop prior to entering the program, if possible.
Then there’s the selection process. It involves an application and questionnaire and then several rounds of interviews and doing due diligence for each of these companies. That all helps us decide who will be best. We do lean on DCU as subject-matter experts during this process, too.
For example, we’ll talk to the lending team at DCU if a lending-based startup is applying for the program.
Typically, it’s about six to 10 startups per cohort. It’s a competitive program.
At the start of the program is Bootcamp: a six-week onboarding process. This is where we help the startups focus, validate the problem, develop a unique value proposition, and then build a stronger pitch. We go through a lot of iterative sessions so they can practice pitching and get feedback.
After that, it’s a lot of entrepreneurial and enterprise education: learning about best practices, sharing our knowledge, and bringing in experts and even alumni who have been there, done that.
One thing I’d like to make clear is this: startups develop at different speeds. We can help them build relationships with potential customers to help address perspectives and needs and then move forward effectively in their development. Mentors with subject matter expertise in sectors or specialties hold office hours. We also have our own knowledge series, in which we bring in subject matter experts to speak about a number of issues about launching a startup. Topics include compliance, pre-production, and investor education.
DCU is very engaged; as a sponsor of the Center, startups have access to much of the credit union staff, from managers to C-level executives. That type of unbridled access and direct feedback is very valuable.
And then once a startup graduates, they still remain in the family. We want the best for all the FinTechs we work with, and we continue to help them. We serve as a resource and provide brand-building opportunities, find speakers at conferences, make introductions, and help them scale up.
NEACH: What are the main advantages of the program?
Vasilios: The Center offers several advantages. It helps provide education and know-how. It also provides access to customers, with the opportunity to build relationships and gain customer insight and feedback. A startup needs to scale a lot of mountains to make an enterprise product and then begin scaling it. We try and help them summit the mountain that they help with in order to bring compelling products to market.
And the program itself provides a lot of credibility to a FinTech. That credibility can separate a FinTech from the rest of a crowded field. And it provides the advantage of a legacy of companies who have graduated the program and gone on to a great deal of success.
NEACH: Can you share some success stories about your graduates?
Vasilios: Posh develops next-generation conversational AI (artificial intelligence). The team was founded by engineers out of MIT, who were researchers in MIT's AI Lab focusing on natural language and speech processing. They launched a chatbot with DCU and a number of other credit unions, and are now scaling up their product. In addition to the chatbot, they also developed a scalable, AI-based, interactive voice response (IVR) solution. Their automated services have been in very high demand since COVID-19: They handled a massive influx of call volumes and support —about 100,000 calls in a month.
Another is Project Finance. It’s a consumer-based startup that will help people manage and see their finances in a completely different way with a focus on financial health and financial well-being. In addition to that insight and education, it also serves as a central account to manage financial relationships in a singular platform. Early on, DCU recognized the value in Project Finance and was ready to invest in the company by the time it graduated from the accelerator. The credit union is now a stakeholder in the CUSO as well as its first client.
Then there’s Digital Onboarding. The digital engagement platform helps credit unions and banks turn account holders into engaged, profitable, and satisfied relationships. Institutions use the platform to increase the adoption of account-related services like digital banking, automatic payments, and direct deposits and to cross-sell additional products.
Edmit is another success story; they use data and personalized advising to guide high school students and parents through the entire college process with less debt. Its platform shares the real cost of tuition for each user, uniquely, based on finances, major, and expected ROI from a particular college. Instead of getting into college and figuring it all out later, Edmit helps from the start. Edmit also offers a financial education course sponsored by credit unions for high schools through our partnership with CU Student Choice.
NEACH: What would you say to financial institutions who might want to work with these FinTechs? Or to FinTechs who might be interested in being a part of the Center?
Vasilios: Don’t hesitate to reach out. We are here to help both entrepreneurs and enterprises on an innovation journey. Engaging with FinTech is about just jumping in. You have to think about risk, but you also have to think outside of the box. FinTechs can learn more about applying on our site and interested mentors can connect here.
Even having conversations that don’t lead to a commercial contract can change the way people think. That has real impact.