Bank and fintech partnerships are not new—you can read about one or two a week in the trade press.
But the reality of bank-fintech partnerships tends to fall short of what the headlines might lead you to believe. That’s too bad, because these ventures offer immense potential benefits to
both parties and their consumers, particularly in the area of payments.
Fintechs get a lot of attention, and rightly so—they are responsible for a lot of the digital innovations we enjoy in payments and finance today. But banks are the foundation of our financial
system; wherever there’s money moving around, banks are involved somewhere in the process. That means fintechs need banks in order to change the financial industry in meaningful ways.
And although banks provide the highest levels of stability and security, their natural (and in many ways desirable) aversion to risk makes it difficult for them to innovate. As customers look for more digital payment services, a lot of banks are having a hard time keeping up.
1. DEFINE WHAT A HEALTHY PARTNERSHIP LOOKS LIKE FOR YOUR BANK
Banks looking to partner with a fintech should first determine their priorities. What are you trying to solve, achieve, or realize? Consider culture fit: How much do collaboration, productivity,
and positive relationships matter to your organization?
Once you’ve answered those questions, define your scope. Figure out the specific projects you want completed and set strict parameters for them. Also consider and account for future incremental improvements, so you can think beyond the product launch stage.
2. SCOPE OUT YOUR NEEDS AND BE WARY OF THE SHINY OBJECTS
After you’ve defined the kind of partnership you’re looking for, it’s time to start interviewing candidates. Meet with a few potential partners and evaluate their culture, growth strategy, and
competitive situation—making sure to note potential areas of overlap or conflict with your bank.
For the partnership to work, it needs to be mutually beneficial, so be prepared to spell out what your organization will bring to the table. Remember that your company has a built-in customer base and consumer trust—qualities many fintechs lack and sorely need.
Many fintechs offer exciting functionality and features. But keep your priorities straight: Stick to your scope, and don’t be distracted by shiny objects you don’t need.
As you begin to narrow your list, think through details like speed to market and ease of implementation. Where possible, try to negotiate a pilot run in a test market of your choosing. Any
fintech that’s serious about a mutually beneficial relationship should agree to this crucial step.
3. LOOK FOR TIGHT INTEGRATION WITH YOUR CORE AND THE ABILITY TO FLEX
To fully reap the benefits of partnering with a fintech, the company you choose has to be willing to work within your core systems including accounting and ERP.
This will be key if you’re going to create a seamless user experience. At the same time, you want a partner that provides the simplicity and flexibility of a cloud-based platform with available APIs and Iframes.
For example, any integrated receivables solution needs to be scalable and customizable for clients based on geography, size or industry. Vertical industries that can require unique and
complex payment options include insurance, utilities, healthcare, property management, education, and government/municipalities.
With the right fintech supporting you, meeting customer demands will be easier than ever—presenting new opportunities to grow existing relationships and to develop new ones.
Read more about EBPP: EBPP: Putting the Tech in Fintech