Partnering with a fintech company can reward your financial institution with innovations that enhance the customer experience, make your operations more efficient, and bring in new customers and markets. But is your FI ready for partnering?
For over a decade, Beyond the Arc has been involved in the forefront of fintech innovation. We’ve seen what makes a successful partnership, and developed a strategy to assess readiness that we call the 5 R’s. Consider each step as you assess your institution’s readiness to pursue a new technology solution and fintech partnership.
What are the 5 R’s?
The 5 R’s are five factors that are often critical to an institution’s success with fintech partnering. They give you important elements to consider, in a framework that’s easy to remember and describe. In this way, you can use the 5-R’s to engage others and build buy-in as you embark on the fintech journey.
Let’s take a look at each “R” – what it means and related assessment questions.
1. Right strategy
We’re in a new age of banking that’s evolving rapidly with digital innovation. But fintech is not a technology project. It’s about re-thinking the way you serve customers; what the customer experience should look and feel like through key interactions with your bank or credit union.
Before you begin to explore a new technology, the first step is to clarify what problem you’re trying to solve. Start by selecting a major pain point or business opportunity. Examples include:
Leadership – Executive Sponsor (e.g. champion for change who helps drive vision, budget, etc.)
You’ll also need to assess if your organization has skill gaps, such as:
Business model development – have you identified new ways to make money?
Acquiring customers – does the solution apply to new segments not in your existing customer base?
IT skills – do you need expertise in working with APIs and open systems?
Data science and machine learning – how will you generate insights you can act on?
5. Right timing
Even if the previous 4-R’s indicate your new solution is a “go,” you’ll also need to consider other priorities at your institution. Is this the right timing for a new technology? A new solution may require change management strategies and communications. Here are some things to consider:
How much change are employees experiencing already?
Will your people have the capacity to deal with changes resulting from this fintech solution?
What training will employees need to help ensure a smooth transition?
How will you follow-up with internal communications to answer questions and build momentum?
Fintech partnering – Ready or Not?
“Banks and FinTech companies partnering up yields the best from both worlds — boosting the industry with new innovative services from a trusted institutional partner. Each side directly benefits in carving a new niche AND gaining a wider reach of clientele — delivering advantages of cutting costs, increasing revenue, and enhancing customer satisfaction.”1
Once you’ve completed your 5-R assessment, collaborate with your colleagues about the information you’ve gathered. Have an open conversation about the pros and cons of the fintech solution you’re considering. Then you can decide if you are ready to pursue the solution through a fintech partnership.
If you’re not ready now, you may be ready in the future – especially with all you’ve learned through the 5-R process.