Compliance red tape. Legacy technology. Bureaucratic cultures.

The impediments to bank innovation were a recurring theme at the Frontiers in Digital Finance conference at Columbia Business School on Monday. They are valid, and we've written about them many times.

But a parallel theme was that innovation is hard for everyone. No one, it seems, has all the answers, even the supposedly most successful fintech startups.

Those realities, in the eyes of some, are even more reason for established players and new entrants to collaborate.

Sahar Zaheer, head of small-business fintech product at TD Bank, said that aging technology infrastructure is the biggest obstacle to innovation and working with fintechs at her bank.

“Sometimes we don't even have the plumbing to connect with a fintech,” she said. “We need to do a whole infrastructure restart. At a bank, it's not that easy because you have fiduciary responsibility, and in many cases you're even regulated to back up customer data" in a specific way.

Zaheer is most interested in getting help from fintechs for know-your-customer vetting and verification in an increasingly digital (and fraud-ridden) age, and in finding the right use cases for blockchain technology.

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"We've micro-pivoted 100 times over the last three years,” Morgan Downey, CEO of, says of the fintech startup's trial and error with different technologies.

People and culture are obstacles for banks, too, said Jeff McMillan, chief analytics and data officer at Morgan Stanley Wealth Management.

“The challenge with big organizations is managing the change, making sure everyone is in the boat as you move along,” McMillan said. “While it's OK to be a little fearful, it's making sure that people understand what they're doing and they've bought into that strategy. Because if you don't, you will fail.”

Val Srinivas, research leader, banking and securities at Deloitte, pointed out that the fintech revolution has forced traditional banks to change their ways.

"What the fintechs have done to the incumbents is encouraged them to reassess” the balance between sales and service, he said.

Big banks are still amassing assets, and they're still profitable, Srinivas said.

“But what [fintechs have] changed is the basis of competition, and the change is focused on the customer. So different innovation models will emerge, and partnerships is one of them.”

But startups have their own struggles.

Fintech startup CEO Morgan Downey founded, which provides software for accessing financial information and competes with firms like Thomson Reuters, talked about the starts and stops.

"We've micro-pivoted 100 times over the last three years,” he said. “We've come up against some roadblock or technology that we thought could work, and we'd find a better solution because we’d see someone in the industry has something better or what we're using just doesn't work. We've learned a huge amount over the last three years, and there's been a lot of micro failures. But you have to do that."

And while banks find hiring the right tech team difficult because financial institutions are not as glamorous as fintechs, Downey said hiring is not that easy at a fintech startup, either.

“Some people can't deal with the volatile situation you have in a startup,” Downey said. “Some days when I leave the office I will take the trash out. And I don't grumble or write [angry] emails. You've got to be OK with a very fluid, volatile situation and imperfect information. You have to have a highly self-starting person who doesn't need a lot of support and who can do multiple roles and operate in a very imperfect market with a lot of volatility.”

Harit Talwar, head of digital finance at Goldman Sachs and overseer of its new Marcus online lending platform for consumers, which is kind of like a startup within a 147-year-old company, gave a rosy update on its blend of old and new. He said “hundreds of thousands” of customers have gotten loans through it, often to refinance credit card debt, and that an online deposit platform is being integrated into Marcus.

But he also acknowledged that Marcus was started during a favorable interest rate environment.

"There has been an incredible amount of benign credit cycle and benign interest rate environments,” he said. “We knew when we were starting the business, environments don't always stay benign. … And therefore you've got to be prudent before markets turn, rather than after they turn.

"We don't take any of it for granted,” he said. “We are paranoid every single day."

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