Over the past few years, the number of bank executives who say fintech partnerships are critical to their institution has almost doubled, jumping from just under 50% to around 90% agreeing with the sentiment.*
Viewing fintechs as a threat has become a thing of the past. Both parties have a lot to gain from true partnerships: fintechs bring ingenuity and banks bring trusted customers. Together, you enhance each other’s business. A successful partnership will help keep your customers in your ecosystem allowing you to deepen and strengthen your relationships.
How to build your fintech strategy and deliver high-impact results:
We recommend asking two high-level questions when considering if you should pursue a fintech partnership:
- Will this increase efficiency for the financial institution?
- Will this fill a need for our customers?
If the answer to one of these questions is yes, you can further build a business case to implement the fintech solution. But knowing that one of these statements is true, means you’re not pursuing a relationship that won’t add value to your financial institution.
Once you’ve answered yes to one of the questions above, you’ll want to dive deeper into further considerations to choose the best fintech partner:
- Does this partner allow your customers to stay in your ecosystem or will they try to off-ramp them into their own ecosystem?
- Does this partnership support a larger KPI within the organization?
- What resources will be needed to support the partnership from implementation into adoption?
- Who are the key stakeholders that will need to be involved?
- What value will the partnership bring to the FI or its customers?
Balancing profit with long term gains
In most cases, a fintech partnership comes with some expenses. Whether it’s SAAS fees or some other recurring expense, it’s easy to shy away from implementing a new solution because of the associated hard costs. However, in order to be successful in creating fintech partnerships, you need to balance profit with long term gains. This means that you will increase profits in other areas that will likely balance out your partnership’s cost. Doing a full cost analysis and understanding the true impact, not just the surface level costs, of implementing a fintech partnership will help key stakeholders understand what the long term gain is: keeping customers from seeking services elsewhere.
Know your organization
Fintech partnerships require time and attention from your staff. Even solutions that are “plug and play” require a subject matter expert who can keep the project on track and key stakeholders engaged for times when operational decisions need to be made. Every implementation project will have its challenges. You can avoid a lengthy rollout or paying for an unused service by:
- Knowing your systems – what will this new solution need to hook into and does your current system have the ability to integrate into your new solution?
- Understand timing and budget – how long does your new solution take to implement and when do you start paying for it?
- Understand the level of customization offered – some solutions will be plug and play only, some will allow for small customizations based on your current systems and others will require a full technical review to be built from scratch for you. Which category does your solution fall into and do you have the resources to support that?
How to overcome your challenges
Having someone on your implementation team who knows how your systems have been integrated and data mapped, will make integrating a new system significantly easier. Said another way, it’s not a secret that FIs often build custom integrations between systems. You need someone who has the historical institutional knowledge to help the implementation team.
All of this may sound overwhelming to you to have in place. However, the right fintech partners will have systems in place to help you through the process. Regional financial institutions stand to gain a lot by partnering with fintechs who can help them keep their customers in their ecosystems, remain competitive and deliver an elevated customer experience.