Over the past few years, the financial services sector has fully established that no business cannot operate alone. Collaboration is key: banks need innovative, agile partners to help develop solutions, while FinTechs will often need the support of a large institution to get their idea off the ground.
Building these relationships can be tricky. Some of the most successful FinTechs in the UK benefit from well-connected founders who might be able to leverage their network or even ex-colleagues to help develop and invest in their solutions. For others, it can be more of an uphill struggle to make innovation a reality.
This week, we asked two FinTechs how they go about building successful relationships with banking partners – and what advice they would give.
“First and foremost, the bank and the FinTech need to agree what success is,” says John McCann, Chief Revenue Officer at Nucoro. “Specifically, both sides need to agree that the goal is to deliver something tangible.”
Nucoro works with businesses to help them become digital challengers with its cloud-based solutions. A key part of Nucoro’s business development strategy, McCann helps ensure that the organisations using Nucoro’s products can be true partners as opposed to just customers. He says the best place to begin a partnership is agreeing on a deliverable.
“Just like you might run an internal project, the bank needs to view the FinTech as a member of the inner circle,” he adds. “This means KPIs are in place just like they would be with an internally resourced team.” McCann recommends that there is a Project Owner within the bank who deals with their counterpart within the FinTech. “Someone needs to herd the cats on both sides, so make sure these people have this kind of experience.”
Has this become more challenging as we experience the now-extended lockdown across the UK? McCann says that it’s still perfectly doable, and that Nucoro is moving forward by having meetings with project teams at least twice a week. “The interesting thing is, we are all in ‘video on’ mode always. It is a prerequisite,” he explains.
“Before Covid, a lot of our meetings were just over the phone with no video. Now people are much more focused as we can all see each other. In fact, because we are also often located in different countries, the presence of video technology has actually brought us closer together with our banking clients.”
Finally, McCann adds that patience really is a virtue when working with a bank, especially in the current climate. “Some of our banking clients have had to reallocate innovation teams to more emergency activities,” he explains. “We had to be wary that for the first three weeks, many of our clients were in emergency mode. We got on with a lot of the work on our own where we could in order to accommodate this fact.”
Chirine Ben Zaied is Innovation Director at Finastra, a global FinTech that provides software and solutions for financial services. Being a good partner and managing relationships is the business’ bread and butter, and Ben Zaied advises that there’s more than one way to skin a cat.
“Building one-to-one bank relationships is time consuming for FinTechs, and long decision-making cycles can make profitability elusive,” she warns. “An alternative is to build relationships with a platform-based approach. The cloud, open APIs and open platforms are enabling easier interaction between banks and FinTechs, to bring faster innovation at a lower cost.”
Rather than a one-to-one relationship, says Ben Zaied, using platforms allows for the creation of an ecosystem involving many relationships. She advises there are three platform models FinTechs can consider. “Firstly, some banks have made their proprietary platforms available, exposed their APIs and invite fintech application creators to collaborate and accelerate innovation.
“Secondly, vendors like Finastra offer open technology and a critical mass of banking customers, and act as an intermediary between financial service providers and application creators. Thirdly, providers such as the UK’s Starling Bank open up platforms to allow smaller FinTechs and application creators to provide functionality to their customer base.”
These solutions outline that while it’s important to build strong relationships with banks, there are many ways to go about this and it’s worth thinking seriously about what best suits your product, business model, and prospective partners. Being sympathetic to a bank’s needs and preferences – especially during a time of crisis – can help develop a network of organisations who become trusted partners.