DECEMBER - 20199Can our existing system providers catch up? Will they partner with one or more of these folks? Can we compete by building our own? Will de novo competitors based on new technology capabilities, eat our lunch? The marketplace demands that many established banks partner with fintechs in some form. I've had the opportunity of several such engagements and have studied others, and can offer six keys to making the partnership beneficial:1. Be careful. As bankers with large installed bases, above all else, we seek not to harm. But fintechs can run with scissors. Before you put too many eggs in their baskets, be sure they have adequate information security, release control, and testing, legal protections, and financial security. They also sometimes have over-aggressive sales and may make promises they can't keep (even more than your incumbent vendors!). Look behind the curtain. 2. Enable your partner to leverage results beyond the immediate deal. Many fintechs are looking for home runs. If you can provide help on that path, they may invest disproportionally in your success.3. Understand your partner's organizational and financial context. Fintechs can be chaotic internally due to rapid growth and a focus on entrepreneurial leadership instead of management. Your assigned team may not be plugged into product development, or the development team you are working with may not believe in independent testing. They may have lots of funds available, need cash in advance, or be right on the edge of solvency. If you know them, you can build better partnerships for both of you. 4. Build personal relationships at multiple levels. All companies are people, but small dynamic ones are even more so. The addition or departure of a small group of people can make a pivotal difference. Understand who matters and build the right relationships. 5. Put service levels and remedies into writing. Fintechs focus on new stuff. Ensuring that existing services are working well may not be a priority. Create commitment and clarity, and then install tripwires that create focus when service levels are breached. 6. Contemplate the end at the beginning. Fintechs, by definition, are taking big risks. They are often intentionally losing money (investing) in pursuit of growth. Consider and carefully think through the consequences of their failure, acquisition, a shift in strategy, and abandonment of your product or service. Build that into your contract and plans.There are plenty of opportunities for mutually beneficial partnerships among firms of all sizes. These opportunities are continually increasing as start-ups proliferate, technology investment needs to accelerate, and globalization reduces barriers. Keep these tips in mind as you explore possibilities and sustain partnerships advantageous to all. BCFintechs can be chaotic internally due to rapid growth and a focus on entrepreneurial leadership instead of management
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