" class="no-js "lang="en-US"> 5 misconceptions on partnering with fintechs & why to ignore them
Wednesday, February 08, 2023
Saltedge Report

5 Common Misconceptions about Partnering with Fintechs – and why you should ignore them

About Wise Platform

Partnerships between fintechs and incumbent banks are becoming more and more common. But even as the benefits of partnership become ever-clearer, some common misconceptions about Partnering with Fintechs remain.

It’s easy to see how concerns might crop up – on the surface, incumbents and fintechs have many differences. At Wise Platform, we work with over 50 bank and business partners, many of whom share their concerns about how a partnership with us would work behind the scenes. Here are 5 of the most common misconceptions we hear:

1. It’s always a better use of resources to build infrastructure internally

When weighing up where to invest in developing new infrastructure internally and where to seek out a partner, one of the key considerations is the time and resource each option will take. It can seem like an ongoing partnership with a fintech will take up more capacity, and potentially cost more money, than a one-time infrastructure update.

Banks save significantly when partnering in comparison with developing or building upon a new product themselves

Yet this isn’t the case. Banks save significantly when partnering in comparison with developing or building upon a new product themselves and can achieve results more quickly for less. This is because they immediately gain the expertise of fintechs who have spent years developing their product. This means no lengthy research and development process – the end product is ready almost immediately, and the integration can take place in a matter of months.

With Wise, partners also gain access to an advanced platform and digital user experience along with the expertise of over 600 engineers focused solely on international payments. This equals an instant uplift in knowledge for your company without additional hiring and training, and goes beyond the technical build into support and operations teams, too.

2. Partnering with a fintech might push users away from traditional banks

Another concern is that by partnering with a fintech, banks might push users away from their own products through an ‘admission’ that their service is better. Nothing could be further from the truth.

Fintechs and neobanks are already enticing many users away from traditional banks by offering a range of innovative products – which are often designed to simplify certain features of the traditional banking experience. 75% percent of consumers globally* have already adopted at least one fintech for money transfer and/or payment services.

By taking advantage of readily available fintech infrastructure, banks actually disincentivize customers from searching for alternative solutions and gain a foothold with future generations of consumers. If you bring new products to your customers that more closely suit their needs, they have no reason to search further afield for someone who will. In fact, far from losing customers, you might attract them from other banks that aren’t making the most of partnerships.

Partnerships don’t have to be complex to be effective

3. Partnerships introduce complexity that creates a high-risk environment

A growing concern is that the complexity of partnerships introduces a high level of risk to your company that you wouldn’t otherwise face. However, this needn’t be a worry for two reasons:

First, successful fintech-bank partnerships communicate effectively from the get-go on requirements – both internal and regulatory – that need to be followed. By leveraging not only the support of your own compliance teams, but also the experience and knowledge of the partners compliance, risk, fraud teams as well as dedicated delivery and support teams, you instantly expand your knowledge and controls to help mitigate risks to almost nil.

Secondly, partnerships don’t have to be complex to be effective. At Wise Platform, our plug and play solutions require very little in the way of integration and can go live in a matter of weeks, allowing customers to cheaply, quickly, and conveniently send money abroad. Even for our more ‘complicated’ products, these are always meticulously designed with compliance in mind to ensure that all eventualities have been considered.

4. Fintechs and banks are too culturally opposed to work together

There’s no doubt that incumbent banks operate differently from fintechs, and these differences are also reflected in the culture of each organisation.

For example, at Wise, we have an in-built structure of radical autonomy – each team and individual Wiser is given a huge amount of independence and ownership over their work. This allows us to get stuff done quickly. Sometimes this can be quite different to how our partners operate.

On the contrary, partnerships between banks and fintechs can create an environment in which both sides can work creatively and constructively together, each offering fresh perspectives that help drive innovation forward more quickly. This is exactly the environment required to produce exciting new products and services for customers that make their lives easier.

5. Partnerships should only ever be sought for products and services you don’t provide

Often, banks and businesses see partnerships as an option only when it will provide their customers with a service they don’t already offer. While this is understandable, it may mean opportunities to improve vital existing services are overlooked. This has the same effect as not having the service at all – customers may see a better option elsewhere and switch providers.

When considering partnerships for existing services, banks may also be reluctant to change course since they have already invested heavily in a product internally. This is the sunk cost fallacy – the idea that abandoning the current trajectory is not an option, even if it would be beneficial. While tempting to think this way, it can truly be better for you and your customers to turn towards partnerships, which can build on what you have and improve it in a fraction of the time and at a fraction of the cost.

Bank – fintech partnerships have come a long way over the last few years, but common misconceptions about how they work and what they can achieve still remain. At Wise Platform, we work with our partners to understand their needs, allay their concerns, and help them build a best-in-class cross-border payment experience for their business and customers. To find out more about how a partnership could transform your offer, contact us today.

*75% percent of consumers globally have adopted at least one fintech for money transfer and/or payment services – Statista.

About Wise Platform

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