A list of five dos and don’ts for banks collaborating with fintechs.
Do treat prospective fintech partners as serious vendors
The term “fintech partnership” often means an invitation to the bank’s lobby. Sandboxes, pitch competitions and in-house accelerators are (not always but very often) merely a means of creating buzz and PR fuel but aren’t taken seriously enough or implemented properly.
Don’t evaluate fintechs on uneven ground vs. traditional vendors
This has got to stop. Banks must start treating fintech companies as potential vendors of the IBM, Microsoft, Accenture and McKinsey calibre. Afterall, change comes from the outside. I realise that this comes at a risk to the bank and that not all fintechs are created equal. So, how does a bank evaluate whether a fintech company is worth assessing and working with as a serious vendor?
Do research into what you need before meeting with fintechs
What is the problem that needs solving? Who is the right partner to help you achieve these goals? Often it’s a fintech company who got sick of traditional solutions and did it themselves.
Don’t try to fit a square plug into a round hole
The time is ticking down to when third-parties can access customer accounts and competition is gonna get fierce. Our advice is to take the research further by partnering with a fintech who offers a clear proof of concept model and is willing to put their money where the mouth is.
Do think outside the box
Seemingly contrary to the above advice, playing it safe with robust research and a proof of concept doesn’t mean dismissing a totally new direction or the creation of a completely new channel.
Don’t continue relying on what’s made the bank their fortune in the past
New regulations in the form of PSD2 and GDPR, together with increasing competition when it comes to foreign exchange and cuts to revenue sources due to tighter multi-interchange fee restrictions mean the same ways of doing business isn’t enough.
Do invest appropriately once you’ve partnered up
If the bank doesn’t believe in the partnership enough to invest appropriately in branding, promotion and acquiring users then it was the wrong partnership to enter into in the first place.
Don’t just assume that the innovation box is ticked and move on to “business as usual”
As per the advice above, investment in a new product, solution or partnership should be measured in more than just your currency of choice. Long-term success is rarely seen without a decent nurturing period.
Do move quickly
Banks have just over a year before they have to expose PSD2 interfaces to third-parties. Google, Apple and Facebook have already launched payment solutions that can be introduced to the European market once they have API access. Amazon is reportedly looking to partner with a big bank.
Don’t wait until it’s too late
Choose a fintech partner who can move quickly and commit to moving just as rapidly. Banks have a window of opportunity in order to make sure disruption moves at a much slower rate and – preferably – under their control.
The mobile payments landscape is currently competitive but you ain’t seen nothing yet.
Note: this post has been shortened – read the full post here
Register for a webinar entitled ‘Profiting From Mobile Payments: How Do Banks Make Money From Mobile Wallets?‘ on 14th June at 3PM London/10AM New York.
