Within financial and banking circles, fintech partnerships are becoming more common as organisations realise that working in partnership with fintechs can help them achieve more than trying to do everything alone. In fact, according to research from PwC, 82% of banks, insurers and investment managers plan to increase fintech partnerships over a period of three to five years. For banks, partnering with the right fintech allows them to focus on what it is they do best, while allowing fintechs to provide additional value to their customers by enabling them to focus on the areas in which they have expertise.
Innovation within the Fintech industry has been explosive in recent years. New technology is adding significant value for businesses across all industries and of all sizes. Solutions that harness technology advancements in the areas of artificial intelligence and machine learning for example, are hitting the market in ever-increasing numbers. They offer enormous potential, and partnerships allow access to banks that may lack the knowledge and expertise in-house to drive, develop and deliver themselves. Additionally, this form of outsourcing allows banks to plug gaps in in-house talent, create a more innovative culture and benefit from insights and expertise fintechs have on banks’ regulation and the sector at large. While it’s clear banks stand to gain substantially from these partnerships, how exactly do they find the right fintech to work with?
Picking an established partner
Before considering a fintech partnership, it’s important for banks to understand the power their brand name holds as there could be a risk associated when partnering with a fintech that doesn’t have credibility, the history or the size to be able to work with a bank of their reputation. Banks must ensure that the fintech they choose to outsource to is capable of doing the things they say they can in order to avoid any reputational damage. To get the most from these relationships, banks should ensure the partner they work with has the longevity, credibility and ability to scale with the bank’s demands.
The pace of change, amount of innovation and technical advances we have seen in recent years is something many commercial banks have struggled to keep up with due to a lack of ability in-house. Banks should look to partner with fintechs that can offer them an edge and the innovation needed to provide their customers with the right services. When looking at the technology platforms on offer from fintechs, it is vital that banks ensure they are compatible with their ERP solution and are capable of adding an extra element to its service.
There are several benefits to using these technology platforms, including not having to invest in developing in-house technology and having access to the latest technological developments, such as automation to improve the customer experience and increase opportunities to self-serve.
Beyond technology platforms, fintechs can also provide the innovation needed to expand an organisation’s product and service offering. For instance, fintechs can help banks develop commercial card technology which can be used by banks to streamline the often bureaucratic and time-consuming spend management process within their customers’ organisations.
Improving the customer experience
The right fintech partnership should offer banks the opportunity to gain a better understanding of their customers in order to improve the customer experience. According to 75% of financial services the most important impact fintechs will have is an increased focus on the customer. Banks should, therefore, be able to look to a fintech partner to help gain a better understanding of their customers and the industry more generally. The right fintech partner will also have an in-depth understanding of industry regulatory requirements and have rigorous compliance standards in place.
Ultimately, finding the right fintech partnership will allow banks to tap into a wealth of knowledge, expertise and innovation that most lack in-house. This will allow banks to devote more time to their areas of strength while also developing a stronger offering of products and services. In doing so, banks will be able to keep up with the latest technologies and regulations and avoid being left behind in a fast-moving industry.