In an environment transformed by technology, the potential synergies between traditional banks and fintech companies are a recipe for mutual success.
Collaboration between banks and fintech firms creates a mutually beneficial relationship that allows them to share their respective strengths, resulting in a superior financial services experience for customers.
Bank-fintech partnerships can be structured in any number of ways, be it as straightforward as the traditional client-vendor model (on a branded or white-label basis) or as involved in a strategic joint venture.
Here's a look at the main benefits of bank-fintech partnerships for both sides:
Benefits for Banks
Whether it's improving mobile banking capabilities or making their infrastructure more secure, banks have to digitally transform their operations to remain competitive. However, building these solutions internally is impractical or cost-prohibitive for many banks, particularly smaller community banks and credit unions. Fintech partnerships are an alternative approach that provide these financial institutions with access to technologies they need that would otherwise be out of their reach.
In addition to savings on R&D costs and implementation times, leveraging a fintech-built solution provides the benefit of a tested and proven tool that already has some recognition in its space - and a dedicated support team that has a deep understanding of the product and can help fix any issues when they arise, increasing peace of mind. The right partner will be able to tailor their solution to your bank's needs and existing infrastructure. Furthermore, reputable fintechs take security seriously and their solutions will include the measures necessary to protect your customer data.
Risk management is another area where partnerships can prove beneficial. Fintech partners with advanced analytics and AI capabilities can enhance a bank's risk assessment and fraud detection capabilities, improving the overall security of financial transactions.
Benefits for Fintechs
On the other hand, Fintech companies stand to benefit from the established reputation and existing customer base of traditional banks. Consumers and business buyers know that banks perform thorough due diligence on potential partners as part of their purchasing process, which makes a seal of approval from a bank a strong trust signal.
Fintech firms also benefit from the regulatory and compliance strengths of banks. Being able to say they are in full compliance with certain bank-specific regulations or follow bank-level risk management practices provides an additional level of credibility that would be hard to achieve independently.
Additionally, bank partnerships can provide access to large amounts of customer behavior data, which a fintech company can use to inform its product roadmap and prioritize feature development.
Benefits for Consumers
In addition to specific improvements such as more functional mobile apps, bank fintech partnerships can expedite financial inclusion, bringing banking services to regions and demographics previously underserved by traditional banking models. By leveraging each other's strengths, these partnerships can democratize access to financial services, providing lower-income individuals and smaller businesses with tools and solutions typically associated with or available to wealthy individuals and large enterprises.
Finally, the partnership can lead to the development of personalized services, thanks to the data aggregation capabilities of fintech companies. By leveraging their customer data, banks can provide tailor-made services, enhancing customer satisfaction and loyalty. This symbiotic partnership thus presents a win-win scenario for both parties, not to mention the end users who enjoy enhanced services.
Make Torpago Your Business Credit Partner
One area where banks need to digitize particularly quickly is business credit card programs. Modern businesses are already moving away from banks for their credit needs because of insufficient card and spend management capabilities. Additionally, changing behaviors are making the reimbursement model increasingly untenable, which makes the need for a flexible business credit program even greater.
Torpago Powered By was designed to make it easy for banks to offer the modern credit card experience business customers are looking for. Built based on our work with SMB clients, our SOC 2-certified solution offers integrations with over 1,000 software tools, making it easy to integrate into your existing technology stack. And with our white label model, your customers will think the credit for the experience is entirely yours. Request a demo today to learn more about how we can help you upgrade your business credit program!
