The idea that banks and fintechs need to compete with each other is unfounded and restrictive to both parties.
Both fintechs and banks have a lot to gain by collaborating, and very little to lose. For fintechs, the most widely cited reasons for partnering with banks, according to Capgemini, include enhanced visibility by partnering with established brand names, achieving economies of scale and gaining customer trust.
For banks, the benefits are much more tangible, and their impact on the bottom line can be immediate.
The European Business Review explained it well: “By tapping into expertise, traditional banks stand to move much more swiftly and effectively than they otherwise could to introduce new products, streamline processes, enhance customer experience, and increase revenues.”
Looking at increased revenues, Accenture claims banks can potentially gain three to five percent by partnering with fintechs, with gains coming from enhanced customer acquisition, more fee-based revenue, better pricing accuracy, and a lower cost of risk.
When approaching a partnership with a fintech, there are a few things banks should be cognizant of in order to ensure success:
1. Serve your customers first
First and foremost, your customers should be at the center of everything you do, including your partnerships with fintechs. How well you are serving your customers dictates your success more than anything else, and every fintech partnership represents an opportunity to further build and solidify customer loyalty.
For this reason, it’s important to partner with fintechs that will address customer pain points the most effectively. There are a lot of fintechs for banks to choose from in the process of finding partners, and the degree to which a partnership with a fintech will improve the life of customers should weigh in heaviest in your decision making.
2. Think holistically about your partnership
If you want your partnership with a fintech to be a success, you need to think deeper than your initial partnership agreement. Especially in sell-through partner channels, setting time aside to have your sales and support teams familiarize themselves with the typical FAQs and support procedures will ensure your go-to-market strategies are aligned, and you are promoting the product or service as effectively as possible in the smallest amount of time.
3. Ongoing collaboration is necessary for success
The nature of your fintech partner’s business is bound to change and evolve. For this reason, it is essential to keep up with the best ways to sell their product or service to your customers.
Many fintechs host training and workshops for the banks they partner with, and offer marketing resources to help banks promote the value of their service. Take advantage of these things to ensure you are getting the most out of your partnerships.
Accounts Payable (AP) Automation is one example of a way a fintech partnership can become a strategic advantage for a bank.
MineralTree has seen banks build customer loyalty while simultaneously driving interchange revenue due to a few core changes, which include:
- The private-labeled solution streamlines a workflow for bank customers that has traditionally been very manual, paper-based, and filled with frustration.
- The updated workflow simplifies the process for bank customers to pay vendors through the commercial card program run by their banks.
- Banks are able to integrate with their customer’s business at a deeper level by addressing pain within the operations of their customers’ businesses.
Also, with AP Automation still approaching a tipping point in adoption, banks have an opportunity to drastically differentiate themselves by offering a solution that is truly disruptive.
Regardless of which types of services or products you believe can bring value to your customers, the opportunity to partner with fintechs makes the process of introducing them and quickly realizing their benefits much easier.