Fintech continues to soar — in lending, investment management, crowdfunding, B2B payments, and so much more. With the fintech boom (which only continues to grow), many financial institutions that were once hesitant to consider fintech partnerships are now seriously examining their fintech options.
Why? Over the last 10 years, financial technology has exploded, with both businesses and consumers demanding innovation in personal and commercial finance. Given that, FIs know that they must be plugged in to the fintech community to stay competitive.
While some experts predicted that fintech companies could disrupt or even replace some FIs, the reality is fintech companies are steadily helping transform the banking industry. And that’s through partnerships.
Let’s take a look at one aspect of fintech partnerships — B2B payments technology.
With a fintech partner, FIs can offer the innovative B2B payments technology developed by fintech companies to their own clients — under the FI’s brand name — ultimately strengthening both the FI’s market presence in the industry and their customer relationships.
If you work at a financial institution, maybe you’re pondering a partnership with a fintech company. Before we jump into the reasons why you should partner, let’s take a look at a few considerations.
Considerations Before You Partner
First, figure out which fintech companies have expertise in the area where you want to partner. In this case, B2B payments. And determine which fintech companies are interested in partnering with FIs (not all of them are). For insight on this, consider reaching out to a consulting firm that specializes in commercial payments, such as SilverStream Advisors or First Annapolis.
After you narrow down fintech companies in the area where you want to partner, remember that not all fintech companies are created equal. Many are startups still trying to establish themselves and acquire clients, and you don’t want to be their guinea pig. So take a look at the fintech company’s history, particularly:
- How many years have they been in business?
- What expertise and experience do their company leaders bring to the table?
- How long have they been offering a B2B payments technology platform?
- Who are some of their clients?
- Do they have client case studies available?
Reasons Why You Should Partner
- Fintech companies offer targeted payment solutions that meet specific client needs. Technology is not — and never has been — the focus of FIs. Historically, and still to this day, FIs’ core competence lies in risk management, deposits, investments, loans and moving money. Banks are particularly good at these activities. Fintech companies, on the other hand, excel at technology innovation that’s agile and user-friendly.
- Scale and cost. Fintech companies can deliver B2B payments solutions at a scale and cost that FIs may struggle to match with a homegrown solution. Why? Same reason as in #1 above — fintech companies and FIs are built to excel at different things.
- Fintech companies aren’t limited to legacy software and systems. While bank technologies are inherently complex due to legacy system integrations and regulatory requirements, fintech products are developed without these constraints, which simplifies both the development process and the user experience.
- Fintech companies can develop product enhancements and innovations quickly. If FI clients need a product enhancement done, how quickly can you make that happen on a homegrown technology platform? Exactly. An agile fintech partner, on the other hand, can typically turn that enhancement around quickly.
- Better and more efficient customer service. Ultimately, the goal is to acquire new clients and retain existing ones. Fintech companies can provide the B2B payment solutions that FI clients need, while solidifying the FI as the source clients turn to for all of their banking needs.
To stay competitive, FIs must continue to evolve and embrace emerging fintech solutions. Especially in the world of B2B payments, where so many corporate clients still battle checks and manual B2B payment processes.
With 20 years of experience in payments technology, AOC Solutions is poised to be your fintech partner for success. Read more about EnCompass®, our payment automation platform, and AR-Exchange®, our supplier portal. We also provide all of the Managed Services you need for your corporate clients. In addition, earlier this year we introduced Transact Global®, an innovative issuer processing platform dedicated to single-use virtual card payments.
If you have more questions, you can talk with us today. Also, just click on the link below to read AOC’s case studies on Eastern Shipbuilding Group (in partnership with Regions Bank) and Navicent Health (in partnership with Synovus Bank).