3 Keys To A Successful Bank-Fintech Partnership

The Abe AI team headed to Chicago last month for the 2017 Next Money conference – a one-day event with over 500 attendees, including 100 CEOs and founders, as well as 20 global banking and fintech leaders. Next Money hosts conferences throughout the year in an effort to promote connections amongst the industry’s leading fintech innovators, who are reinventing finance through design, innovation, and entrepreneurship. The theme of this conference focused on three critical areas for the success of bank-fintech partnerships: capabilities, compliance, and collaboration.

Our own Keith Armstrong sat down for a fireside chat moderated by Jason Henrichs, co-founder at FinTex, and one of our customers, John Schulte, Chief Information Officer at Mercantile Bank of Michigan.

Watch Keith’s full talk below.

During the fireside chat, the panelists gave some tips around collaboration and compliance when seeking out vendor partnerships. The panelists all agreed that consumer financial health is an important trend and that financial products should offer services to the end-user which target that; the product should help consumers to take control over their financial lives and control their daily habits. It’s also important to bring all vendors together early on in the collaboration process. This is helpful to map out the architecture or solution before the due diligence process takes place.

Collaboration

Collaborating with your customers for a better, more well-rounded experience can lead to success in the world of modern digital banking. One area of collaboration discussed was “Give to Get.” This is the idea of a system getting smarter and more personalized as it learns more about the user. For instance, as the user engages with the product, it begins to learn more about that individual. The user can then correct any incorrect or misleading information so that the banking experience becomes unique to them. It’s all about creating a seamless banking experience and being able to anticipate what a user will need or want at any given time. Implementing new skills and capabilities beyond traditional banking products and services, including ongoing collaboration through personalized products, is key to ensuring customer satisfaction and retention.

Keynote speaker Jim Marous, co-publisher of the Financial Brand, focused on collecting and using customer insights to drive more personalized experiences, as well as opti-channel delivery, which enables the consumer to use whatever channel and digital device they choose to connect to their bank. It’s important to let consumers connect when and where they want, in a personalized way.

Capabilities

Next Money also discussed capabilities, which focused on platforms connecting bank partners with vendors who have gone through the due diligence process. Platforms like Avoka, Temenos, and Constellation are becoming “trust brokers” or matchmakers. Cost of integration plays a big role in any such capabilities and being able to optimize scalability, reliability, and compliance are all factors that make them inflexible.

Another key element of the capabilities discussion was forming not just partnerships, but a customer-vendor relationship, which requires additional capacity on the part of the financial institution. With the implementation of technologies with artificial intelligence, that relationship needs to be even more adaptive. There are two factors that play a big role in creating this kind of partnership. The first is that it needs to be more than a vendor management partnership unless the financial institution has data scientists and strong developers on their team. The second one is recognizing that AI is always learning, and so the implementation process is never truly finished.

Compliance

The last theme focused on the idea of making compliance a part of the process early on. Jason Henrichs from Fintech Forge said, “Doing something new brings on risk, but doing nothing new brings on catastrophic risk.” Don’t let regulation be a blocker to trying something new or from doing something different that may be out of your comfort zone.

According to a Thomson Reuters report, about $80 billion is being spent on regulatory compliance across the financial industry. That number is set to rise by 50% to $120 billion in the next five years. At this rate, it’s no secret why there is such an interest from both risk and compliance professionals.

This theme also focused on fintechs becoming best friends with one person in procurement, in the business unit, and in compliance. Developing a relationship that allows everyone to work together by setting clear definitions and guidelines from the start.

Next Money Chicago was an awesome experience for the Abe AI team. During this time we were able to learn from industry thought leaders and connect with fintech and banking experts. We look forward to attending upcoming Next Money conferences in the future.