ABA Banking Journal - September/October 2017 - 32
SPECIAL REPORT > TECHNOLOGY AND INNOVATION
Strategies for successful bank-fintech partnerships
BY MONICA C. MEINERT
hen the wave of new fintech startups burst
onto the scene several years ago, announcing
themselves loudly as disruptors of the banking
industry, bankers rightfully worried. How
would these new players affect day-to-day
business? How would they be received by customers?
And, importantly, how could banks keep up with the pace
of the competition?
Time and reality have since set in, and the tone of
the conversation has shifted away from "compete"
toward "collaborate." Banks increasingly see the value
of capabilities developed by fintech firms, and those
companies in turn are becoming better acquainted with
the challenges of regulation and other barriers to bringing
their products to market.
There have been wakeup calls on both sides.
For banks, the wakeup call has been the realization
that customers are coming to value-and expect-a
frictionless banking experience. And if banks can't
provide that kind of frictionless experience, Henrichs says,
they'll turn to alternate solutions.
ABA BANKING JOURNAL | SEPTEMBER/OCTOBER 2017
With more fintech players now coming to the table as willing
partners, banks that have innovation strategies in place will
find themselves better positioned to gain a competitive edge.
"The best bank perspective on this is that fintechs aren't
their main competitor now," notes ABA VP Steve Kenneally.
"Their main competitors are the other banks that are using
fintech better than they are."
"Some banks are going to thrive in this new era-they're
going to use technology to hit well above their weight class,"
Henrichs adds. And it's not just big banks that will thrive-
community banks stand to gain a significant competitive
advantage by leveraging technology. Henrichs describes
a $2 billion bank he worked with recently that has taken
advantage of technology to expand operations beyond the
geographic bounds of its six branch network, proving that
"you don't have to be big to be thriving in this."
"For the startups, it turns out it isn't just the regulation
that's hard-people's interactions and relationship
with money is really weird, and it's really hard to
shift," observes Jason Henrichs, managing director
of the FinTech Forge-an organization devoted to
helping financial institutions and startups navigate the
That being said, banks have two key advantages over fintech
companies, he notes: the strong relationships that they
have built with regulators, and an existing customer base.
"That's why the second wave of fintech innovation ... is very
focused on 'how do we serve the banks?'"
Keys to building a
successful fintech strategy
1.Adopt the right cultural mindset.
foremost, the bank must have an appetite for innovation.
"If you change your culture and your mentality around how
you're going to partner with [fintech companies], there's a real
opportunity to remake your business," Henrichs says.