In 2018 and beyond, traditional financial institutions and FinTech companies are making serious moves in the form of partnerships. While financial institutions offer a captive audience and the security of adherence of financial regulations, FinTech companies offer a new, creative and practical way to help consumers handle their personal finances, accelerating innovation among the financial institutions that take advantage of their offerings.
Banks Gain Information and New Offerings
One of the biggest benefits financial institutions gain by partnering with FinTech startups is the ability to stay engaged with their customers — and vice versa. On one hand, banks gain access into special insights about their customers such as their spending habits, how they choose to allocate their money, and savings goals they might have. This information helps banks accurately and easily offer other services, like loans, to their customers in a way that is highly tailored to their customers’ needs and unique financial situations.
In a similar fashion, consumers stay more engaged with their banks by getting genuine use from innovative FinTech solutions. In a way, FinTech companies do a lot of the legwork when it comes to innovation by coming up with creative and useful ways for consumers to better control their finances. This takes some pressure off banks who do a good job of choosing and supporting FinTech partnerships, and allows them to instead focus on building relationships with their customers.
FinTech Gains Legitimacy and Adoption
By partnering with banking institutions, FinTech companies can create a form of legitimacy and sense of security around their product. Financial institutions rely on their security and protection against risks like identity theft, and this reputation they’ve cultivated through adherence to banking regulations can be extended to FinTech companies they partner with. Many of the regulatory requirements that apply to financial institutions involve an incredibly steep legal and executive learning curve, and financial institutions offer the know-how to help FinTech companies overcome this hurdle.
Furthermore, FinTech companies gain a large potential new audience with every financial institution partnership they create. The increased adoption and partnership with a financial institution creates a positive cycle of increased adoption, which adds legitimacy, fostering even more adoption.
Importance of a Personalized Relationship
The reality is that the new world of banking and FinTech is constantly changing. Small and large disruptions will continue to be a theme in the years to come, and financial institutions will need to continue to leverage partnerships in order to stay relevant and competitive. However, this change-is-the-only-constant attitude also creates a unique competitive edge for good old fashioned relationship building. More than ever, consumers are looking for financial institutions that understand their needs, go the extra mile to help them achieve financial security and assuredness. Financial institutions that add personal touches and take time to personally get to know their customers create a layer of added security among a sea of constant change and a differentiating factor that is, unfortunately, overlooked by too many tech-focused banks and credit unions. A combination of innovative FinTech partnerships and old-school customer service will create a winning combination through 2019 and beyond.