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Home Retail and Marketing

The Right Way to Develop Lasting Partnerships with Fintech Firms

December 21, 2021
Reading Time: 5 mins read
The Right Way to Develop Lasting Partnerships with Fintech Firms

By Kathleen Craig

More than five years ago, I wrote an article for the ABA Banking Journal outlining my stance as to why financial institutions should embrace working with fintech firms.

As the CEO of a fintech company myself, I can understand why banks may be hesitant or not know how to join forces with firms like ours—especially those that are still in the early stages or actively pursuing their first clients.

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However, banks have to continue to drive innovation in their organization in order to compete with direct-to-consumer fintech start-ups and “unbanks.” Which are continuing to raise billions of dollars with the mission of disrupting the banking industry and can bring services to market seemingly without jumping through the same compliance and due-diligence hurdles that slow down the process for banks.

Five years after my original pitch for partnership, more and more tech-driven companies that have not paid their dues in the banking space are continuing to supplant the institutions who have. As you choose your partners, please remember: Not all fintech companies are built the same. There are plenty in the fintech industry who are building FOR your bank and their drive is to add value to your customers and help you compete.

The number of FDIC-insured institutions in the U.S. dropped 19 percent over the last five years, and 35 percent since 2010. To remain competitive and ensure longevity in a market that gets more cutthroat by the day, banks must invest in innovation and find the fintechs that want to build mutually beneficial partnerships.

Here are some of the advantages of working with fintech firms:

Fintech firms can help revisit (and revise) your digital strategy

The banking landscape changes every day, and financial institutions must evolve to meet their customers’ progressing needs—or those customers will take their business elsewhere. In a recent survey taken pre- and post-COVID, 12 percent of respondents before the pandemic said they intended to switch financial institutions in the next year or two. In the follow-up taken after the pandemic hit, that number spiked to 22 percent.

The COVID-19 pandemic forced a monumental shift in digital strategy for banks everywhere. In the midst of tremendous uncertainty, financial institutions everywhere were forced to launch upgrades in solutions and technology to serve both staff and customers. Unfortunately, many of these institutions were not adequately prepared to deploy these upgrades when they were needed most.

Furthermore, institutions that could not offer the convenience, ease of use and self-service capabilities that consumers both wanted and needed during the pandemic faced dissatisfaction. That’s why it’s crucial for banks to revisit their digital strategies to ensure they can satisfy their customers’ needs and ensure long-term loyalty.

Here are just a few things your digital strategy should address:

  • Digital marketing.
  • The ability to cross-sell and advise.
  • An integrated, digital user experience that rivals the big banks and the “unbanks.”
  • Customers who only bank digitally.

Now that you have a good idea of what you need to accomplish digitally, you can find the right fintech partners who want to help you, rather than unseat you.

Think collaboration vs. competition

Simply put, you cannot offer modern banking solutions without technology. Depositing a check, paying bills, applying for a loan and so many other vital financial services are carried out online with technology that was built to cater to evolving customer needs—making it easy for companies like Apple, Google and SoFi to enter the fray.

But hope remains. According to a recent survey about the banking habits of Generation Z, 87 percent of respondents said they currently bank with traditional providers. Could it be because banks have the financial knowledge, experience, well established reputations and a dedication to service that banking outsiders lack?

In addition, there are more than 7 million unbanked households in the U.S. according to the most recent biennial FDIC survey. There is an incredible opportunity here for banks and fintechs to collaborate, rather than compete, to serve a broad range of American citizens who need solid, reputable and dependable financial services.

Tips for forming a solid fintech partnership

Know your bank: It is impossible for a bank to be all things to all people. Focus on the products and services you do best and look for opportunities to leverage technology to enhance customer experience.

Be willing to take risks: Obviously, this is a tough notion for banks. But if you want to innovate, you must be willing to launch products that have the potential to get your bank where you want it to go—even if those products are not perfect from the beginning.

I do not think products should be viewed as all-or-nothing right out of the gate. The path to exceptional fIntech products includes pilot programs, building betas, measuring results, etc. You also want to consider using marketing service agreements as opposed to vendor agreements.

Assign resources: It is ill-advised to launch a new innovation and assume everything is going to go effortlessly and smoothly. There must be ongoing support and ownership, during and after the launch, to ensure the product is successful. And if possible, assign resources to track results, as this will help you quickly diagnose potential problems.

Finding fintech firms to partner with: Be proactive. Aim to find a firm that can help your institution reach new heights. Ask for product demos, visit booths at trade shows and exhibit halls and ask copious questions to learn about company culture, leadership, policies, etc.

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Do this until you find the right fintech partner that can help you build a plan for success and launch the type of products and services you need to grow in the competitive marketplace.

Kathleen Craig is the founder and CEO of Plinqit with a specific focus in digital channel strategy. Plinqit serves community banks across the U.S. ranging from $30 million to over $15 billion in asset size. She was a speaker at the 2021 ABA Bank Marketing Conference. Contact her by email at  [email protected], as well as on Twitter and LinkedIn.  

Tags: FintechVendor relations
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