Our blossoming bank and fintech relationship has reached the ‘let’s make it official’ phase. But even though we both want to end up in the same place, charting a path there can be complicated. First, we have to make sure we can get past our fundamental differences to see a happy future together – preferably in the form of a commercial agreement.
We’ve had a few meetings, the chemistry is good, and we’re both excited about the prospect of building a future together. But the complexity of bringing a bank and a fintech together becomes apparent quite quickly.
Trying to change processes within a bank that involve security, data protection, production environments and software updates is no mean feat. We are always humble to the fact that a bank’s processes are there for a reason, but we have to find a way to work with them to get the partnership off the ground.
From what we’ve seen in the last three years of putting bank and fintech partnerships together, we have a couple of tips for getting through these early challenges.
Our number one tip is having a strong internal champion on each side. Someone who can spearhead the initiative, dig into the details, and understand the concerns on each side. If you don’t, you never get past the early discussions, because the starting point of a bank and a fintech are far apart. In all our partnerships with banks, we’ve seen that having an internal champion is a critical success factor.
On the bank side, the champion is a spider in the web of different banking departments. Someone who can walk a fine line between getting the buy-in of management and managing expectations. Aligning departments to take a united message back to the fintech and keep things moving forward, while escalating any issues.
On the fintech side, it’s about having someone who can really understand the processes of the bank, and why it’s necessary to work in a certain way. Questioning what the bank is trying to mitigate, looking at the interpretation of regulations, and understanding exactly what the bank is basing its arguments on.
The final role of the champions on both sides is to ensure the scope of the project never gets too big, mitigating the risk that every person in the organisation wants to add their own little feature to the project – meaning five years later you’re still at square one.
Being part of a development project with a fintech is very different from what many banks are used to. We make continuous deployments and update systems all the time. We use cloud-based solutions, software and platforms. It’s a big shift for how a bank usually interacts with technology, because the industry as a whole has not yet taken that leap.
Previously, banks installed third-party technology into their data centres, with the expectation of it being updated every year. Now, we take the software, we keep it in our cloud, we operate it, fix it and make sure everything is running smoothly. The bank simply integrates with our APIs and it just works.
These different takes on tech can be a point of conflict when banks are trying to ensure there are no issues, no bugs, and that security is in order. Which is, of course, very important so they feel able to move on to the integration phase. The solution to this? Taking everyone with you.
To move forward, we all need to ensure that relevant teams throughout the bank have a good grasp on the technology behind the partnership. It means taking everyone through how the tech works, why the bank is merging with this technology, how it is going to be used, and what will be achieved by implementing it.
The first hurdle is usually getting product, risk, compliance, legal and security teams on board, without causing too many people to wriggle uncomfortably in their seats.
If you can have all of these stakeholders in a room to go through the partnership in great detail, and they come out understanding the technology behind it, you know they will all be more likely to give the project the green light.
Everyone has to come out of that room saying: ‘OK, let’s do this.’
In part three, we’ll take you through the implementation and integration phase, and how to chart a smooth path to product launch.
Northmill is on a mission to build personalised banking services that improve people’s finances. By plugging Tink’s open banking technology into its app, Northmill will deliver a seamless and relevant customer experience.
When charging or paying out customers, businesses rely on them to provide their account details. But people can make mistakes – or try to commit fraud. Thankfully, account verification can save everyone a lot of grief.