Fintech partnerships are starting to heat up, with nearly 75% of banks and credit unions entering into at least one fintech partnership in the past three years. Fintech partnerships offer traditional finance brands an easy and cost-effective way to access innovative technology and address consumers’ digital needs better. Here we break down the three types of partnerships you need to know, and how they can transform your finance brand.
The benefits of fintech partnerships for traditional finance brands
More and more consumers are turning to digital platforms to manage their money. New research by Galileo has identified that while 77% of adults use traditional finance brands, 61% are somewhat or highly likely to switch to a digital-only provider.
Maintaining momentum in the digital arena is critical for finance brands across the board as digital technologies and advancements become key decision factors for many consumers. Fintech partnerships offer traditional finance brands a way to quickly deploy emerging technologies that would be too costly or time-consuming to do independently.
With consumers more satisfied utilising digital-only financial management tools, there’s a clear opportunity for traditional finance brands to retain customers and acquire new ones through fintech partnerships. In the same Galileo research report, it found of the 65% of consumers who use traditional banks as their primary provider, only 66% are satisfied. However, satisfaction jumps to 79%, and 81%, respectively, for those who use digital-only banks (21%) and stand-alone digital accounts (7%) as their primary provider.
According to Scott Woepke, the former global head of financial services strategy at Acxiom, “[Bank-fintech] partnerships are not just an emerging trend. They are a new core competency for financial institutions.”
“ Nearly 75% of banks and credit unions entered into at least one fintech partnership in the past three years. ”
The three types of fintech partnerships
According to a research report by Synctera, there are three major types of fintech partnerships your finance brand needs to consider. These include:
- Operational technology partnerships – This involves a finance brand deploying third-party technology to its own technology infrastructure to help improve efficiency and the user experience.
- Customer-oriented partnerships – This partnership is designed to benefit the overall customer experience. Finance brands partner with fintechs to improve a variety of customer-facing areas of the business. In this type of partnership, the bank communicates directly with its clients.
- Front-end fintech partnerships – This type sees finance brands combine their infrastructure with technology developed by a fintech brand. In this partnership, the fintech interacts directly with consumers to deliver products and services.
Deciding which one of these fintech partnerships your finance brand needs will depend on your goals. With the appropriate guardrails and method of delivery put in place, each one of these fintech partnerships can provide you with access to innovation and will ensure you better address consumers’ digital needs.
Fintech partnerships can be what your finance brand needs to remain competitive in a constantly evolving digital arena.