Evaluating Fintech Partners to Ensure Long-Term Success
Consider these four things for a mutually beneficial, long-term partnership that fosters healthy growth and innovation.
Account holders now expect a smooth and seamless digital banking experience, and best-in-class functionality no matter the size of their financial institution. For many credit unions, that’s where fintech partnerships come in. Aligning with the right fintech enables credit unions to leverage innovative technology that makes their user experience competitive with the megabanks.
But not every relationship will result in accomplishing the financial institution’s goals – that’s why finding the right partner is so important. To give the fintech vendor selection process the best chance of long-term success, credit unions should incorporate several key criteria into their evaluation process.
Understand How Their Tech Integrates With the Institution’s Infrastructure
Before approaching vendors, answer these two questions: What problem does the technology need to solve and how will success of the solution be measured?
When starting the evaluation of potential solutions, develop an in-depth understanding of how the vendor’s underlying technology operates and how it fits within the financial institution’s existing infrastructure. Does it integrate well and is there demonstrated evidence of successful integrations? Once the technology is implemented, what additional support will be needed? Does the team have a deep bench strength on the technology side? If the financial institution does not have the in-house resources, understand what support is available from each of the partners being considered.
Additionally, find out how the vendor plans to scale the technology. As the credit union’s member base grows, a fintech partner’s platform should scale alongside it. Another key question to ask is, will the technology be able to meet the evolving needs of the members? Account holder expectations today are very different from what they were just a few years ago, and they will continue to evolve. Whether it means offering additional features, providing greater flexibility or ensuring security can scale to meet future needs, be sure that the vendor is committed to improving and enhancing its product.
Determine Their Strategic Fit
The fintech space is crowded with vendors, all of which have different specializations and provide different levels of service. While some vendors can service all the financial institution’s technology needs, others are tightly focused on a smaller number of service offerings.
When vetting potential fintech partners, it’s important to identify how the vendor will strategically fit within the rest of the financial institution’s ecosystem. How well does it integrate with the core tech stack? What resources will be needed internally for the relationship? What kind of support do they provide? Getting detailed answers to these questions will help narrow the list of potential vendors to only those that best fit the needs of the institution.
Do Their Values Align?
A vendor’s organizational values are an intangible factor that often isn’t prioritized as highly in the review process as elements such as price or industry experience. But, if the vendor shares the same core values with the financial institution, the quality of the partnership is likely to be high. Even when a vendor may not be the best fit on paper, often the culture, people and commitment more than make up for any potential shortcomings. A collaborative approach alongside aligned culture and values can go a long way toward creating a lasting and successful partnership.
How Do They Respond When Challenges Arise?
Even the most meticulous planning can’t account for all potential scenarios, and unforeseen challenges will occur during every technology project. Bugs or glitches may pop up, service outages may occur and other issues may arise throughout the course of the partnership. The tech implementation may run behind schedule or unexpected additional costs may surface.
When the financial institution inevitably runs into such issues, how will the vendor respond and step up to address them? Clearly define and communicate expectations up front, and make sure both parties are on the same page. It’s easy to have a good partnership when processes and technology are going smoothly, but true success is defined by how the partner responds during testing times, especially if it affects the member experience.
Adopt a Long-Term Perspective
Incorporating these above criteria into the vendor selection process can pay huge dividends. They can help ensure alignment within the financial institution on the overall needs, and that both sides of the partnership clearly understand the expectations. Creating a path for a mutually beneficial, long-term partnership will foster healthy growth and innovation for both parties.
Adam Craig Vice President of Corporate Development Alkami Technology, Inc. Plano, Texas