The next decade is going to be one of great change in the banking and lending industry, with huge opportunities for the fintechs and banks that are prepared to work together and take them, says Funding Options' Eugenie Casier.
When asked, more than 90 per cent of banks said they are willing to work with fintechs, with 75 per cent of fintechs wanting to work with banks. That’s all well and good but, at the moment, it can feel a little bit like a school disco with all the girls on one side of the hall, and the boys opposite, glancing awkwardly at one another but never plucking up the courage to ask someone to dance. It doesn’t need to be that way and, from our own experience as a challenger fintech brand, collaborations can be extremely powerful for fintech and bank alike.
We have been fortunate enough to work closely with a number of banks in the UK, for example with one established bank creating an easy-to-use small business lending hub. We have also partnered with another bank in Netherlands which helped expand the business and allowed us to launch in a new territory, with the bank referring businesses who would benefit from non-traditional funding to our platform. From this, we’ve seen a four-fold increase in the number of customers helped since last December. We’re also seeing 10 per cent growth month-on-month in lead flow, so it’s clear that this collaboration is working for us.
There are no doubt obstacles to collaborations, working with an established bank can sometimes feel like David vs Goliath, especially if you find yourself working with a very large product team. Don’t fall for myths and misconceptions though, you don’t want to hold yourself back unintentionally.
Contrary to what many believe, the big banks aren’t slow, and they do in fact value progress; they want to partner and share their data and technological capabilities. Naturally, they have due diligence processes, but they needn’t be onerous and intimidating. And whilst you might assume that banks would want to control everything and own all the intellectual property, it’s unlikely that’s the case.
Big banks and fintechs have a shared road map and shared goals. Banks benefit from the agility of fintechs, who often have faster decision-making processes in place, while fintechs benefit from the banks’ expertise and brand awareness. Banks are moving toward a one-stop shop model for their customers financial needs, but they don’t necessarily have the resources or desire to develop those tools in-house. They are very open to learning from fintechs and having outside companies create those products for their customers.
As a fintech, if you establish a good relationship with a bank, the knowledge, insights and learnings that they can share are invaluable. Big banks have substantial distribution capabilities too, something that would take a start-up decades to match in terms of exposure and awareness.
Having a shared vision is important, as is staying true to your values. There’s no point partnering with a big bank if you lose your identity in the process – something we’ve strived to maintain in our collaborations. Choose wisely, you need to focus on finding a good match to ensure your collaboration facilitates a creative space where ideas can fly. Find a partner you trust and who trusts you. Make sure you meet regularly to ensure you’re all still on the same page and your processes are aligned. Landing a collaboration of this kind proves the strength of your business; it means your partner believes in you and your product – other industry players will take note. A successful partnership can open many more doors.
There’s a lot of space on the dancefloor and a lot of opportunity to find a good partner, but there are some key things to abide by to ensure you maximise the opportunity that bank collaborations offer…
Find out how you can help their customer; how will you as a fintech add value to their offering?
Don’t feel intimidated; just because they’re big businesses, doesn’t mean it’s not worth approaching them.
Stay true to your values; find someone you trust, don’t partner for the sake of partnering.
Finally, don’t lose sight of why they wanted to collaborate with you in the first place – be your fintech self!
The next decade is going to be one of great change in the banking and lending industry, with huge opportunities for the fintechs and banks that are prepared to work together and take them. The end-user will have a far larger arsenal of financial knowledge to inform their decision-making thanks to the embedding of fintech in their day-to-day business operations. From our perspective in alternative small business lending, we’re expecting to see increased personalisation and far more automation. We are going to see a move away from transactional intervention to something much more predictive. Speed and ease will be built into the user experience, with the end-user at the centre of new products. Fintechs and banks have the ingenuity and resources to unlock this potential together.