Success in contemporary banking comes down to providing the best consumer experience. People’s banking expectations are higher today than they used to be due to the rapid expansion of consumer technology. Consumers today demand immediate, personalized access to their finances, making it critical for banks to utilize fintech technology to provide the best user experience possible
Effective bank-fintech collaboration is a mutually beneficial partnership that makes it possible to give customers cutting-edge technology for their financial services. Unfortunately, many banks see fintech as competition. This causes them to miss out on valuable opportunities to work together to benefit from joint innovation and growth. This collaboration between fintech and banks will ultimately bolster their profits and earn customer loyalty.
With fintech and banking partnerships being the way of the future in terms of financial products and services, here are a few tips for ensuring a successful integration.
#1: Identify Prospective Partners With Similar Goals
Choosing the right partner will be a key determining factor in whether or not you achieve your goals. Fintech banking partnerships require finding a company with resources, knowledge, experience, and values aligned with what you need so you can successfully expand your fintech financial services and revenue together. Suppose you are a fintech company wanting to provide faster payments as part of your product services. In that case, you’ll need to partner with a bank with a comparable mission that can partner with you as a payment processor through their network of debit cards.
Banks looking for a fintech partner (or vice versa) should know what they want to achieve with their new partner before making anything official. Knowing your goals for the partnership will make it easier to narrow down the right company and give you more control over the relationship. Make a list of what you hope to achieve with your new partner and identify some potential companies to work with. In some cases, you may need to assess the holes in your operations and then discover ways that a fintech partnership could fill those holes. After you obtain a Mutual Non-Disclosure Agreement, be transparent about the challenges you’re facing so your fintech partner can get the full picture and understand how they can help.
#2: Prepare for the Partnership
When you’ve narrowed down the options of the fintech you want to use, check the company’s scalability and pricing to ensure it can help you grow. Do your full due diligence and risk assessment on your top prospects and be meticulous when learning about their operations, business model, and offerings so you can make an informed and smart decision.
Due diligence is vital when your fintech partner is getting access to sensitive customer data and other bank information. As part of the due diligence aspect, make sure you review the company’s security policies, incident management processes, financial statements, and gather reports of known problems, so you don’t take on any unnecessary risks.
#3: Create a Business Plan Addressing Regulatory Requirements
As with any other aspect of your business, you need a plan for adding new fintech financial services or expanding your financial products. Work together with your fintech partner to develop products and services that are intuitive, functional, and beneficial to the bank and its clients. The plan should follow a traditional business plan format with an executive summary, a company description for both entities, comprehensive market analysis, financial projections, and any legal, state-specific licensing, regulatory, or operational requirements. Having a detailed description of how you’ll meet the requirements before rolling out the new product or services is vital.
#4: Listen to the Way Customers and Employees Respond
Most bank-fintech partnerships are initiated to improve the overall customer experience. For this reason, it’s critical to pay attention to how your consumers receive your partnership-provided offerings. You may need to adapt your products based on customer input and make adjustments until you perfect the product or service you intend to deliver. In the end, it’s usually worth the time and resources that you invest to have these products successful, which results in loyal customers and continued growth at the bank.
Equally important as listening to customers is listening to your employees. Fintech partnerships may appear threatening but should take the opportunity to educate your bankers on the ways fintech can make things easier, quicker, and less stressful. Make it clear that fintech is not meant to replace them but to assist them in serving their customers better by providing unrivaled efficiency. You may end up earning the same loyalty from your employees that you do from customers when you provide them with the tools needed to work smarter and faster.
A Real-Life Example of a Successful Bank-Fintech Partnership
A large Multi-National Bank and Zelle collaboration are among the best bank-fintech partnership examples. The Bank spotted an opportunity when the use of cash began to decline. They decided to expand their digital payment services by making it easy to send, request, and receive payments through the app called Zelle.
Zelle is an app that allows you to transfer money directly from your bank account to the accounts of your friends and family. Unlike Venmo, it doesn’t require a third-party platform to exchange the funds. When the partnership with the Bank began at the start of 2020, over $27 billion flowed through Zelle from Bank customers from over 100 million transactions. The Bank couldn’t have accomplished this feat without Zelle, and they both profited from the uptick in digital transactions.
Fintech partnerships aren’t going away, and it’s going to become more difficult to compete in the finance industry without their collaboration. Now is the time to start integrating with fintech’s that can help you grow and expand.
Contact BMA Banking Systems for More Advice
BMA Banking Systems is dedicated to providing integration of fintech’s to banks and credit unions grow through customized software solutions for every financial institution. Contact us today for further tips in creating a successful banking-fintech partnership by reaching out to our experts today. Please visit us at www.bmabankingsystems.com or call 801-887-0122.