Much has been inked on whether and how FinTechs might disrupt or collaborate with Financial Services incumbents. More recently the larger banks are charting their own internal, FinTech-esque efforts. They have been active in investing, collaborating with FinTechs… and now, more and more, the likes of Goldman, Bank of America, and Morgan Stanley are talking up their own digital capabilities.
The small-to-mid sized banks and credit unions represent a large market opportunity for FinTechs and digitization. It holds the promise for improved client experience, greater transparency and automation, and lower risk. And while we have seen growing interest in FinTech from regional and community banks and credit unions, we haven’t seen meaningful engagement. The self-build path is not a choice for them and they often do not have the scale and resources to effectively collaborate. A prominent barrier to engagement is that mid-size financial institutions have to make sure any FinTech solution also works with their legacy systems. The capabilities of the legacy cores, loan origination systems, or CRMs aren’t evolving at the pace of FinTechs. Also, it is difficult and costly for financial institutions to exit commercial contracts, migrate from customizations built up over the years, or retrain staff on new systems. In most cases, what these institutions need is a toolset that can connect and integrate with old and new technologies- a universal adaptor, if you will. For banks and credit unions, Sandbox Banking is that universal adaptor.
Sandbox is a Boston-based software integration platform for banks founded by CEO, Ravi Balasubramanian, and CTO, Skye Isard who met while working at the Harvard Management Company. Their first start-up venture, before pivoting to Sandbox, was a goals-based robo-advisor for the enterprise market. When reflecting on why they decided to pivot, Ravi says “while implementing [the] robo-advisor… we discovered that our internal API framework & integration toolkit was where our customers found the most immediate and scalable value.” He elaborates, “we saw how the economics of our first pilot with a major institution was destroyed by the cost and time associated with system integration and data security. [We saw] that every project the institution considered faced these same hurdles so we built Sandbox.” SixThirty’s Managing Partner, Atul Kamra, defines the pain of integration as “the long pole in the tent of every project. It holds up the tent – but also holds up the tent-making”. Failure to mitigate technology integration issues can cost institutions hundreds of millions of dollars. Sandbox gives FIs a cost-effective platform to safely test and integrate new solutions.
Before joining SixThirty, Sandbox went through the Y Combinator Winter 2017 program where they got known as the FinTech marketplace for FIs. They landed early customers and began establishing a name for themselves in the industry. Working with SixThirty, Sandbox realized that the magic was their ‘universal adaptor’, a platform that significantly cut down integration time and costs between FinTech and FI partnerships. What initially brought Sandbox to SixThirty was their “[need] to focus on sales development,” Ravi says that “as technical founders learning to sell was going to be critical to our long-term success”.
SixThirty’s mission of connecting FIs with promising FinTech products aligns well with the investment in Sandbox. Kamra identifies integration as the one part of a project that is often ignored. He adds, “The current approaches to integration are inherently non-scalable. It is also the part no one really wants to work on – the proverbial stepchild. Sandbox brings a fresh, scalable approach to integration – and to achieve interoperability. In a time of increased collaboration between FIs and FinTechs, they are an accelerator and a force multiplier.” Josh Herzog, Director of Consumer Lending at KeyPoint Credit Union, a current customer of Sandbox’s has only high praise for how Sandbox helped modernize their banking experience for account opening and loan underwriting and said that “the Sandbox team is driven, organized and highly responsive.” Because of solutions like Sandbox, FI and FinTech partnerships now focus less on the technical limitations and focus more on the value the partnership adds to the end customer.