Making fintech investments work: The secrets to successful partnerships

Four steps to picking a technology partner for the long-haul 

Technology budgets at many community and regional banks and credit unions are stretched to capacity.

Yet, there’s no shortage of ongoing projects: migrating core infrastructure to the cloud, connecting new IT systems with lingering legacy programs, figuring out how to compile data from all parts of the business to power new AI models, or deploying tailored applications that help improve operations or delight customers – like new financial planning software or a more consumer-friendly interface. 

These aren’t easy lifts. They can be expensive and complicated, and any failure could be catastrophic for the financial institution (FI). Often, smaller FIs are unable to recruit the talent needed to handle all tech capabilities in-house. That’s why it’s so important for credit unions, along with regional and community banks, to choose technology partners they can trust for the long-haul. 

The rise of AI is going to make IT environments even more complex for FIs. Progress is happening every day, and adaptability is key. When starting out on a new digital transformation journey, leaders need quick wins to prove the investments are worthwhile. But more importantly, they need to focus on setting a strong foundation that can handle the unknown future that lies ahead. 

Here are four ways to ensure that fintech partnerships are set up for success.

Invest time in research and goal-setting

It’s not uncommon for banks to want to dive right in and select a tech vendor that can check the box on offering the latest payments trends. But this is a recipe for disaster. Before starting the partnership search, executive teams must spend time thinking about their organization’s long-term goals. For example, if you’re looking to improve your personalization strategy to build customer loyalty, you can measure success through customer retention or expansion into other offerings, whether loan origination or financial wellness options. Leaders have to be honest about the gaps or points of weakness in their current operations to understand how technology can help. They also need to ensure they fully understand how customer demands are shifting or figure out what technology may be giving competitors increased market share.

By jumping in head first with a tech investment without conducting the proper research and setting the right goals for their specific institution, banks and credit unions risk spending millions of dollars to offer new products or experiences that will fall flat shortly after launch. 

Focus on your strengths and trust your partner to improve ‘weaknesses’ 

Once a bank or credit union's goals are clearly defined, it’s easier to understand the roadblocks to success. This understanding will help greatly narrow down the list of possible vendors that institutions will need to vet. That’s because the initial process makes clear in-house expertise versus the gaps that a technology partner can fill. 

But choosing a new tech partner doesn’t mean the bank or credit union should be silent. A company’s own employees often know the end customer better than anyone else. They know the unique needs of both current clients and the broader community – insight that can be used to enhance new digital products. 

With your new vendor handling the heavy lift to address the gaps identified, employees are able to devote their energy and talents to the most important task: building stronger customer relationships. This can go a long way in generating ROI for the bank or credit union.

Take onboarding seriously

Banks and credit unions often take a “set it and forget it” approach with their tech partners. 

They’ll spend a ton of time choosing the partner, then completely ignore them before, during or after the onboarding process. Ultimately, this leads to wasted time, energy and resources.  

Business leaders should keep a constant dialogue with their chosen partners. That’s how to develop a foundation built on trust, which goes a long way in ensuring new projects get off the ground smoothly. And when things get even more complicated down the road, that confidence in the companies providing your core systems, innovative payments products or other crucial functions will be paramount. 

Analyze the impact together

To build long-term partnerships with a bank or credit union’s technology partner, ongoing dialogue should be based on a set of aligned goals and metrics, with specific milestones or dates to track progress against. 

There should be honest discussions about what’s working and what needs to be improved, so banks, credit unions and their tech partners can address issues along the way to make sure goals are achieved from the outset of the project. 

An ideal financial partner – be it a community bank or a credit union – is one that can serve its customers or members throughout their entire lives. That’s why it is so important for FIs to find the right technology alliances that can help them stay ahead of fast-changing customer demands. The time to establish and cultivate those partnerships is now. And those that fully commit will reap the long-term benefits.