March 25, 2021

Startup shake up: Dispelling the myth of David vs. Goliath

For many industries, the last 20 years have been a period of intense change and transformation as they have had to adapt to the digital age. For many large, incumbent businesses in these industries, innovation has taken the form of working closely with the startup community – small, agile businesses harnessing the possibilities of new and emerging technologies to reshape the way problems are solved and our lives are led – to bring fresh eyes and thinking to long-held ideas and practices.

“The most agile corporates have always looked to the startup world for inspiration and innovation, not as competition but as a competitive opportunity,” says Yoram Wijngaarde, founder and CEO of, a global data platform for intelligence on startups and venture capital. “As we enter a new age of deep tech, with every industry set to be transformed by new technologies like AI, blockchain and quantum, startup engagement will only become more crucial for established firms.”

From cross-pollination of ideas to new ways of working, there are benefits for both parties. Wijngaarde says the research and development and commercialization capacity of big firms make these partnerships crucial for startups.

“Europe is home to some of the very best technical talent, leading universities, a maturing startup ecosystem and far-reaching corporates,” he says.

Success in the next generation of technology will require collaboration across all players.

Increasing competitiveness rather than creating competition

While it may seem counterintuitive for a well-established incumbent to support new market entrants and risk creating a potential future competitor, it can be difficult for large companies who have long done things a certain way to change direction or try new things, even if the willingness is there.

Sergiu Negut
Sergiu Negut, Co-founder of Romanian startup FinTech OS

In many cases startups can help their larger counterparts stay relevant and become more competitive, says Sergiu Negut, co-founder of Romanian startup FinTech OS, a member of the Microsoft for Startups program.

For example, some established banks are finding their traditional brick-and-mortar industry challenged by digital-first newcomers, specifically around customer experience and the loyalty gained or lost as a result, according to The Economist Intelligence Unit (EIU), which shows digital banks are seen as offering customers more innovative products and a better overall experience.

Coming from a fintech background themselves, Negut and his co-founders saw an opportunity to help traditional banks navigate the digital transformation, by empowering them to become customer-centric and adopt a data-driven approach. The company assists legacy banks and insurers in accelerating their digital transformation, enabling them to build end-to-end digital products in weeks rather than months. Through open source and ready-to-deploy apps, pre-integrated with Microsoft Azure, organizations can plug into their own systems with little effort, offering access to highly personalized financial journeys and products for customers.

The ideal scenario, for any organization, is the ability to start with a single customer journey and expand with more journeys that are very interconnected.

Such was the case with one large bank in Poland, which he says started with digital onboarding of new-to-bank customers more than two years ago and has since added loan origination on multiple channels and settings, subject matter expert onboarding and now mortgages.

Startups are also often called “disruptors” because in many cases they can accelerate an industry’s evolution, which is often largely influenced by regulation. For example, the open banking initiative, which was meant to drive the creation of myriad new financial products and services by allowing access and control of consumer banking and financial accounts through third-party applications.

Latvian startup Nordigen

Another Microsoft for Startups member, Latvian startup Nordigen, which provides transaction analytics tools to banks and lenders, recently announced it would be the first in Europe to offer a free API to access account information. The move is aimed at minimizing one of the major challenges in realizing the potential of open banking – the often prohibitively expensive cost of accessing banking data in the first place.

For co-founder Rolands Mesters, the logic behind making Nordigen’s primary offering free is simple. Adoption of open banking has been slow; as a technology provider which piggybacks on that adoption, his own company’s growth prospects are stifled by the high price tag attached to potential innovation. By challenging the status quo, Nordigen wants to empower its customers and its competitors to do the same.

“I’m pretty sure that many companies have been thinking about how to leverage the opportunity of open banking,” says Mesters.

Now that we’ve taken a step towards democratizing access to data, I’m sure many will follow the same path in order to stay competitive.

Out with the old

For many organizations, the hesitation to embrace digital transformation and innovate their processes is due to the difficulty of tackling built-in complexity of legacy systems. A new breed of tech startups is addressing  this complexity by creating “low code, no code” solutions which don’t require a lot of coding or engineering knowledge to implement – making them easier to adopt, use and maintain.

Rauno Sigur
Rauno Sigur, Chief Executive & Co-founder of DriveX

In the automotive insurance industry, for example, claim management is still a largely manual, laborious and time-consuming process for insurers and claimants. As a result, automotive insurers today are losing billions to fraudulent claims, manual processes and lost sales opportunities. After Rauno Sigur, founder of Estonian startup DriveX Technologies, was in a car accident, his experience afterward changed the way he thought about automotive insurance claims and how car insurance is purchased.

Also a member of the Microsoft for Startups program, DriveX’s technology allows insurers to provide their customers with a simple, user-friendly and rapid tool for uploading good quality and compliant images to support their claim. The web-based tool means drivers can easily access it online without needing to use special applications, particularly when they might be anxious or stressed after an accident. Real time feedback ensures the right images are provided from the scene, ensuring the right level of detail needed for the claim to progress.

“Studies have shown that investing as little as $1 into pre-inspection technologies or services saved companies on average $34 in fraudulent claims,” says Sigur, who estimates up to 70% of damages can be assessed viewing an image remotely, jumpstarting various background processes such as planning labor and ordering vehicle parts.

Using such image recognition technology, people can react to accidents in a matter of days, not weeks.

“Ultimately, their car gets repaired faster, and the claim is solved. But the processes currently in place are still largely manual, even in a digitally forward country like Estonia, let alone elsewhere.”

By working in close collaboration with startups who are often ahead of the curve in a rapidly evolving digital environment, well-established businesses can build on the value they have already created in their operating models, while still taking advantage of innovative new solutions and practices far more quickly and effectively than if they were starting from scratch or going it alone, Sigur says. In turn, these partnerships can open doors for startups to sizeable opportunities for growth and development that they might not otherwise have access to, creating the very best kind of virtuous cycle for both side.

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