JPMorgan slashed how long it takes to test out fintechs from 9 months to 3 weeks with a new process that could save it millions as it looks to buy, invest in, or work with more young companies

For a bank the size of JPMorgan, putting a fintech through its paces used to be a long and costly ordeal. 

But as banks look to work with startups now more than ever — either through partnerships, investment, mentorship or as a customer — all are interested in speeding up the selection process. 

"Almost every fintech will tell you it's a blessing and a curse to work with banks," Michael Elanjian, head of digital innovation at JPMorgan's CIB, told Business Insider. "The difficulty is that bank policies and procedures have historically led to longer sales cycles. The benefit, is that access to a bank's size, scale, and distribution can be immensely powerful."

JPMorgan takes a rapid approach to POCs

At JPMorgan's corporate and investment bank, it traditionally took roughly nine months to run a fintech through a proof of concept, costing the bank tens of thousands of dollars. With roughly 650 companies a year being evaluated and assessed, that can lead to a lot of resources being used. 

Elanjian aimed to overhaul that process in 2019 as part of a mandate to work with more startups.

"One of our goals is to partner more and work with the fintech community to build an innovative ecosystem," Elanjian said. "Client needs continue to evolve, and we want to be creative in providing solutions."

Enter rapid proof of concept — RPOC for short. 

The process was developed in 2019 to cut down the time and resources it would take for the bank to realize whether or not it wanted to work with a startup, and required coordination among 150 across the bank. The goal was to speed up how quickly the CIB could decide if it wanted to work with a fintech. 

"It's about increasing the large end of the funnel, and the pace at which we move through sourcing and evaluating and into the decision and implementation stage," Elanjian said. 

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Part of that included cutting down on the documentation a fintech would need to get through before being able to even test its technology with JPMorgan. NDAs were standardized and made digital, while the evaluation agreement was made more "fintech-friendly," cutting out 80% that was only applicable for large vendors. 

Synthetic data in an AWS sandbox

But RPOC isn't just about minimizing paperwork. A huge time suck for both fintechs and banks is around the former proving to the latter they can indeed deliver on their pitch. As Wall Street's needs become more data-focused, this becomes even more difficult since banks aren't willing to hand over a key to their database for startups to play in.

"It's really hard to make an assessment based on claims with a lot of data-related activities," Elanjian said. "Coming up with a framework that helps evaluate these solutions in an efficient manner, being respectful to the company's time as well as our own employees, was a core pillar to the strategy.  We needed a way to test something for viability and being able to act in a quick and efficient manner was a real pain point we were trying to solve."

JPMorgan's solution was to build a sandbox on AWS where tools could be tested in a controlled environment. A handful of data sets were pre-approved, along with the creation of synthetic data mirroring JPMorgan's own data, to speed up how quickly data-intensive tools could be tested.

All of this has resulted in big time and money savings for the bank. Elanjian said with RPOC the average time it takes for the bank to make a decision on a fintech is now three weeks. Meanwhile, the costs have plummeted to only a few hundred dollars per company.

To be sure, the sample size is small. Elanjian said only a handful of fintechs were run through RPOC in 2019. However, he already has plans to expand the process to how all businesses across the bank, not just the CIB, handle fintechs. 

But, even with the expansion, there is no target on how many fintechs the bank would like to see with RPOC.

"We don't set goals based on the number of companies evaluated," Elanjian said. "That can too easily lead to solutions in search of problems. We're focused on the quality of our partnerships, and how aligned they are to our strategic priorities."