There’s no “I” in team, the old saying goes.
This adage, trite as it may be, holds true in corporate partnerships, especially those in which the parties working together come from entirely different verticals.
Technology companies and financial institutions run on completely different business models. Tech moves fast and embraces rapid change; banks are mired in regulation and can move at a snail’s pace. So, given their differences, how do fintechs successfully work with banks and vice versa?
It’s about developing trust.
For partnerships between fintechs and banks to be successful, each party needs to recognize the other’s strengths and shortcomings. It’s a push-and-pull that can produce positive outcomes for both parties if executed correctly.
Letting Go – Delegating Responsibilities That Make Sense
Financial institutions and fintechs need one another to be successful. Banks provide the ability to store and transfer funds, while fintechs provide a platform that’s user-friendly.
Traditionally, banks have been accustomed to being in total control of their products – from back-end development all the way to marketing. Sunrise Banks Chief Risk Officer Amanda Swoverland says in the case of fintech partnerships, banks need to recognize a new, less-encompassing role.
“A bank is used to controlling everything,” said Swoverland. “A bank has to be willing to give up some of that and know that it’s okay.”
Fintechs, on the other hand, need to realize that regulation, as burdensome as it can be, is a must in the financial sector. While fintechs run platforms, banks produce the back-end regulation necessary for a product to be compliant and effective.
As Sunrise Banks Chief Strategy Officer Eric Schurr says, the bank is ultimately the entity that explains a product to regulatory bodies.
“It’s important for banks to set really clear expectations about where they sit,” said Schurr. “We need to be a trusted advisor. The sector is heavily regulated and dynamically regulated. The regulators move deliberately but the regulations change at a rapid pace.”
Differences in expertise aside, banks and fintechs can develop solid relationships through ongoing communication and respect for one another’s capabilities.
That means getting together often to set clear expectations from the outset. “Trust,” as defined in a fintech-bank partnership, means realizing that each party will need to give up some control in order for the relationship to be successful.
“When you trust that the info the other party is giving you is valid and you trust that they’re an industry leader, things tend to go really well,” said Swoverland.
“Fintechs need to have an appreciation for what we can offer and we need to have an appreciation for what they do best.”
Sunrise has partnered with numerous fintechs to offer convenient financial services for customers, including TrueConnect and SelfLender. Click here for more information on our fintech partnerships.