How Banks Can Create Fintech Partnerships that Work for Both Companies

By Kevin Sullivan

JPMorgan Chase CEO Jamie Dimon said fintech and big tech are “enormous competitive threats” to banks. But fintech does not always mean “bank replacement.” Recently, fintech-bank partnerships successfully distributed stimulus funds despite tight timelines and trying conditions. This demonstrated that banks can pick and choose services from fintechs who are more than willing to partner with the Old Schoolers.

Here’s how banks can best partner with fintech.

Culture: Recognize and reward groups within the bank that successfully work with outside companies so it becomes an accepted practice rather than a perceived weakness. Everybody is on board.

Honest Gap Evaluation: Provide product owners within each group with a score sheet to assess current offerings versus the three fastest-growing providers in their space to find gaps that can be filled by a partner. Recently, we’ve seen banks partner for mobile investment tools, loyalty & rewards, machine learning, cryptocurrency purchases, cross-border payments, loans, user experience, leveraging data, blockchain and Decentralized Finance (DeFi).

Consider the Overlooked: For good reasons, large banks have passed on opportunities because they are “too small.” A fintech partner can get your bank back into “Bank at Work,” small business lending, “Teen Banking,” thin file credit policy, “Self-Driving” savings apps, specialized business loans, social savings collaborative finance and others the bank couldn’t support.

Find the Players: A small, centralized business development team can source the best candidates via search, referrals, trade media coverage, consultants, referrals from the bank’s investment bank unit, events and sell-side analysts. To go all in, the bank can host competitions to award promising start-ups and provide mentoring to the new companies.

Move Quickly: Conduct a paced, effective review process. B2B decision-maker groups are typically made up of 8+ people in a large company. Make sure they are limited to the key groups responsible for revenue, compliance, risk and vendor management.

Bring Your Value-Add: Banks bring expertise in compliance and risk. And perhaps other areas. Ensure this is contributed to the new partnership.

Seek Other Ways to Partner: After launch, your bank can find other paths to partner with the fintech. Be the bank sponsor for other business operated by the fintech? Deliver commercial banking services to this growing company?

Your bank can embed the fantastic new service in your customer digital offering. And down the road you’ll offer banking-as-a-service to other players in financial services and maybe even transportation, insurance, government, communications and healthcare. You’ve gone from disrupted to disruptor.