Partnering with larger, established financial institutions can be a great way for innovative, ambitious fintechs to scale their business, and drive positive change in finance – be it underpinning new customer solutions or transforming regulatory reporting.
In 2020 the Fintech Delivery Panel, supported by HM Treasury and powered by Tech Nation, launched The Fintech Pledge to support the development of productive partnerships, and to ensure the UK is the best possible place to start and scale a financial services technology firm.
To raise awareness of these globally leading standards, we recently held an event to deep dive into the ambition and ongoing implementation of the Fintech Pledge.
One of the guests was Roisin Levine, Head of Banks at Flux, a fintech company that delivers digital receipts into customers’ banking apps when they shop at participating retailers. Flux’s bank partners include Starling Bank, Monzo and Barclays.
Roisin has some incredibly valuable insights into how banks and fintechs can work together to build successful partnerships.
Here she shares her top ten tips:
Be optimistic, but be realistic
Scaleups are taught that speed is key, so it can be frustrating when things don’t happen fast. But the reality is, large partnerships with significant potential and upside for both parties can take a long time.
When you consider the scale that an incumbent bank could provide for any fintech, it’s worth acknowledging the time investment in relation to direct acquisition channels and costs.
Manage your expectations but also try to show the bank that you understand and appreciate their limitations on speed. You can still do everything possible to accelerate the partnership process!
Simple and fast, trumps big and complex
Small pilots can turn into very big strategic partnerships, so if it’s possible to deliver a lightweight proof of concept, push for this route early on.
I understand that it is tempting to want to aim for a partnership with as much breadth and depth as possible, but progress can be accelerated if you can find a way to be tested and available through a bank partner in the short term.
You can still negotiate and progress the terms of broader partnership in parallel, while you work towards the initial proof of concept. As a scaleup you do this from a position of strength and momentum once you have a pilot in progress.
Understand each others constraints
Processes are in place at large companies for a reason and, although it is the wish of any fintech that these processes get speedier and more efficient, the reality is that they won’t change dramatically. It is best to work within the boundaries set to make things as easy as possible for initial cooperation.
This can be as simple as letting the bank set the conference call details or making sure that the required documents are sent in formats which can be opened on the bank’s network.
Supply the tools needed to sell you internally
Decks are great and certainly serve a purpose, but do not underestimate the power of a prototype. The ability to put something in the hands of someone senior who might be short on time, that allows them to experience something new and great from the customers’ perspective can be invaluable.
Bring your idea to life in any way possible. Remember you are competing for attention against hundreds of fintechs.
Repetition, Repetition, Repetition
It is easy to become frustrated by the fact that you can end up talking to many different teams within a large organisation. But don’t be demotivated. See it as an opportunity to meet new people and get your solution on to their agenda.
Remember that for a large partnership to happen it requires many many stakeholders to be championing your organisation and often repetition is the only way this becomes possible. Be resilient and keep making those pitches!
Compliance – get organised
This is so crucial for your credibility. Flux is really proud to be ISO 27001 certified. Strictly speaking we didn’t need this accreditation, but we chose to obtain it as it meant recognition for meeting best practises for information security, incident management and physical security.
All of this shows a commitment to compliance and security in front of your biggest potential partners. Your ability as a scaleup to show up front how seriously you have considered compliance will only accelerate your partnerships.
It is also a great idea to create explainer decks with very specific audiences in mind that go beyond just the commercial or partnership teams at banks and building societies. Think about the technical team, the legal team, the Data Protection teams, and the pricing team. All of them may need to understand how your partnership should be considered in light of their specific area and remit.
It will help the internal champions at the bank gain further confidence, create buy-in from other teams and make your conversations generally more frictionless.
Know your niche
Big organisations don’t generally have the luxury of always understanding one problem inside out. Scaleups have often done extensive research, spoken to real customers and obsessed about their solution for years.
This is your USP, a big organisation may have been around for hundreds of years but they haven’t necessarily been able to turn their full attention to solving every problem. You can be their expert, you can give them new insights as well as better solutions. Convey this at every opportunity and do not take it for granted.
This one is really crucial. Dan Rose, Former VP of Partnerships at Facebook, tells a story about how Mark Zuckerberg told him to go out and win a partnership with Microsoft. He scored the deal and in his next catch up he was boasting about how good the deal was for Facebook when Mark Zuckerberg stopped him and said ‘…how’s it working for Microsoft so far?’
It caused him to reflect on the partnership and the goals of both companies. These goals were different, for Facebook it was about short term revenue from banner ads to invest in their new products. For Microsoft, it was simply the scale that Facebook could bring them.
So try to challenge yourself before and during any partnership to always ask if it is working for both sides and if you are both achieving your very different but important goals.
Align yourselves in more ways than just the commercial elements of a partnership
There are lots of ways to do this. Strategic investment is one of these, and often banks will take a stake in a fintech they are looking to partner with, aligning both companies for the longer term.
But public events, marketing opportunities and generally raising awareness of your shared mission can really help both organisations get more from any partnership.
Which leads me to my final and tenth point of….
Finding common ground
Scaleups and banks are very different, often we get used to describing these differences and the challenges they present when partnering. But sometimes it’s best to focus on the common ground that exists between your two organisations;
- Both of you have Shareholders
- Both of you have internal pressures to prioritise initiatives and projects
- Both of you have individuals working within them with KPIs, P&Ls and career objectives
- Both of you are tirelessly trying to stay ahead of the competition
- And both of you probably want to work with great people, to have fun and do something that matters with real impact
These things don’t necessarily change whether you’re in a small or large organisation, and they will help you gain perspective when you are looking to work together successfully with an incumbent.
To conclude, there are many challenges to partnerships, especially between fintech and established banks, they are often not straightforward nor speedy to set up, but that does not mean they are not incredibly valuable or successful when launched.