Practice Open Communication to Establish Meaningful Relationships With Fintechs

Digital innovation is one of the most important stepping stones to success for all financial institutions today, and an area that credit unions are increasingly looking to address. From determining which technologies best suit their members’ and employees’ needs to managing their implementation, the largest barrier for credit unions to overcome is establishing strong working relationships with their fintech partners and vendors.

An Issue of Perception

For years, fintechs carried a stigma of being poor collaborators and difficult to work with. And, while this proved true in select early cases, the fintechs of today are credible companies backed by honest professionals looking to improve how financial institutions operate. These business leaders are entrepreneurs with successfully established careers in other industries, who are now in search of new opportunities.

Of course, a career move into financial services is never simple. Indeed, the litany of laws, regulations and governmental policies that regulate it are by no means clear-cut and serve as a constant reminder of the intricacy that managing a credit union entails. These business leaders have proven themselves within such industries as information technology, healthcare and many others, but still rely on the expertise of bankers to understand how credit unions operate and the complexities of financial services.

Credit union executives offer invaluable insight into how their cooperative operates, their members’ and employees’ needs, and how to comply with federal and state regulations, whereas an information technology expert can help credit unions improve their technological framework and initiatives. Not only does this create a better experience for employees and members, but it also establishes that element of trust and collaboration necessary in such relationships.

Steps to a Strong Working Relationship

The key to a successful partnership, for both sides of the aisle, is in open and honest communication. Credit unions should set their expectations early with regard to what they want out of a fintech and whether they are looking for a direct partnership or vendor-client relationship, the exact timeline they want to see a project completed, what types of reporting and documents will be required of the fintech, and especially what their expectations are for a final product.

Likewise, fintechs should come to the table with their due diligence complete as well. Companies should provide prospective credit unions with copies of their business continuity plan, detailed descriptions of what services or products they can provide (and their level of individual customization) and, depending on what service is provided, results of third-party audits such as SOC reports. Not only will this demonstrate honest initiative on the part of fintechs, it will also support credit unions’ efforts to get internal buy-in from decision makers and in their work with regulators.

All of this is not to say that every expectation can be laid out from the very beginning, but with open, honest communication as a starting point, credit unions and fintechs alike can establish meaningful relationships that foster innovation in financial services. And, through such relationships, drive change within the financial services industry to better serve members and the local communities credit unions serve.

Mark Anderson is CEO of Banc Intranets. He can be reached at 423-926-8527 or mark.anderson@bancintranets.com.