Fintechs and banks are not adversaries. They actually have more in common than not. While it is patently true that the rapid digitization of financial services has been an upset to traditional banking, a cohesive partnership between banks and fintechs is proving to be the future of the banking industry. Over the last three years, nearly half of banks formed a partnership with a fintech start-up, and the trend is only increasing. In an EY survey, 91% of banks said that fintech partnerships would be important or very important to driving business strategy over the next three years.
Forming a partnership is only the first step. Both organizations will need to take care to ensure a successful and durable relationship; one with a strong alignment between both organizations, a deep understanding of core goals, clear go-to-market plans and a shared commitment to growth. Every successful bank-fintech partnership has these three key characteristics.
Corporate Alignment
Above all, a partnership should be a good fit for both organizations. To begin, banks and fintechs should share similar company cultures, business philosophies and work styles. When organizations are a good ideological fit at the beginning, the partnership has a strong foundation built on cohesion and unity, setting up all other goals for success.
Next, the fintech and bank should have compatible experiences and skills to create a mutually beneficial and effective partnership. Fintechs will want to work with a bank that can help them navigate compliance gaps, a blind spot for many start-ups. This will mean pursuing partnerships with banks that have established relationships with regulators, along with fraud and compliance product partners that have experience helping fintechs meet regulatory requirements. Likewise, fintechs are the gateway to modernization for the banking sector, and they can deliver the digital experience that customers want. Banks should aim to work with fintech companies that have a clear marketing strategy and a compelling customer acquisition platform. Choosing a partner with complementary services will allow the partnership to create a robust digital financial services experience and create a competitive advantage.
Both organizations should work directly with one another through an embedded banking software platform to ensure smooth and speedy integration. Direct communication is the best way to understand one another’s needs, align their business models, and address problems quickly.
A Defined Strategy
At Grasshopper, we like to say, “Fail fast and fix it.” The idea is to get a product to market quickly, measure the customer response and make the appropriate adjustments to meet customer needs. This strategy is a faster pathway to success than retooling a product endlessly in development. Searching for perfection is a long process, so we prefer to avoid the delays, remain flexible and expect challenges. Often, banks and fintechs will find more success launching a pared down product and building it out once it has hit the market.
It is essential to balance speed to market with product quality. Banks and fintechs should be aligned on product launch timeline and execution. There should be full transparency throughout the product lifecycle and an elementary understanding of the typical process, including necessary resources, stakeholders, timeline and expectations. Fundamentally, a product launch needs a core strategy for customer adoption, which will be aided by speed to market.
Banks and fintechs need to define the strategy early on in the partnership. Corporate alignment ensures that both organizations are synergized, but defining a product strategy is the execution component—and it is critical to a successful partnership.
Plan for the Long-Term
Bank and fintech partnerships are not a short-term endeavor. This is a long-term relationship that could span decades if well executed. Through the duration of the relationship, both partners need to engage in strong communication to maintain best practices and develop innovative solutions that meet market demand. This will establish a lasting and strong partnership.
Following a product launch, partners should collect customer feedback and develop a collaborative response to solve pain points and expand the product offerings. Although both the bank and fintech should have internal resources, the process should be a joint effort, managed side-by-side. Likely, this will require open and continuous communication and clarity to maintain a strong partnership even after your product is in the end user’s hands.
Ultimately, a product launch is only one part of the bank-fintech partnership. The partnership should be able to expand offerings and new products as needed to meet customer demands and stay ahead of the technological curve.
Alignment and transparency are essential to forming a successful bank-fintech partnership. With a near infinite number of fintechs for banks to choose from, forming the right partnership is the difference between thriving in the digital banking sector and falling behind.
Link: https://www.fintechnexus.com/transparency-the-key-to-a-successful-bank-fintech-partnership/?utm_source=pocket_saves
Source: https://www.fintechnexus.com
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- Source: https://www.fintechnews.org/transparency-the-key-to-a-successful-bank-fintech-partnership/
