Skip to main content

Looking for Valuant? You are in the right place!

Valuant is now Abrigo, giving you a single source to Manage Risk and Drive Growth

Make yourself at home – we hope you enjoy your new web experience.

Looking for DiCOM? You are in the right place!

DiCOM Software is now part of Abrigo, giving you a single source to Manage Risk and Drive Growth. Make yourself at home – we hope you enjoy your new web experience.

AML/CFT Asset/Liability Lending & Credit Risk Loan Origination System Portfolio Risk & CECL

How to establish quality fintech partnerships

Kylee Wooten
December 17, 2021
Read Time: 0 min

Components of an effective fintech partnership

If leveraging new technology is a priority for your FI, ensure these three elements are present for an effective fintech partnership. 

 

Learn top best practices for leading a successful software implementation.

DOWNLOAD WHITEPAPER

 

Takeaway 1

Having a cohesive vision from the top down is critical to a culture of innovation and the successful adoption of new software. 

Takeaway 2

When evaluating a fintech partnership, ask how the vendor will help with integration, training, and ongoing success.

Takeaway 3

Many FIs will price-compare vendors, but neglect to consider potential hidden costs, especially when managing multiple vendors.

As the saying goes, “the only constant in life is change,” which is certain for the banking industry. It’s been nearly two years since the coronavirus pandemic began, and many banks and credit unions have undergone a significant digital transformation in response. Many financial institutions that were already on the path of digitalization have continued expanding their digital offerings to meet the needs of their customers and members. Meanwhile, the pandemic all but forced financial institutions that were hesitant or had not yet begun implementing new technology to kickstart the adoption process. While digitalization is critical to scaling business, keeping customers and members happy, and maintaining a competitive edge – it can quickly become challenging to manage each fintech partnership to maximize the investment.   

It’s great that more financial institutions are welcoming technological innovations, but banks and credit unions must consider the long-term impact of their partnerships. According to recent insights compiled by the Federal Reserve and published in Community Bank Access to Innovation through Partnerships, fintech partnerships are most effective when three core elements are present: 

  • Commitment to innovation across the community bank 
  • Alignment of priorities and objectives of the community bank and its fintech partner 
  • A thoughtful approach to establishing technical connections between key parties including bank, fintech, and the bank’s core services provider 

If leveraging new technology is on your financial institution’s New Year’s Resolution list for 2022, be sure to consider how each element is reflected in your bank or credit union.  

 

Start at the top

Build a culture of innovation

New technology is not a silver bullet. It doesn’t matter how much or how little you spend, if the end-users aren’t using the technology, the financial institution will not see a return on the investment. One of the most integral pieces to the success of new technology is garnering buy-in across the institution. This may be an easier task for institutions with a culture of innovation – rewarding and supporting new ideas and creative strategies. However, many financial institutions and employees are content with the status quo.   

How can you build a desire for innovation for those that don’t see the need to make any changes? The foundation of a solid culture of innovation should begin with the financial institution’s senior management. Having a cohesive vision from the top down is critical to a culture of innovation. In fact, corporate culture is more important to an innovative culture than the institution's size, level of investment, location, or regulatory environment, according to a recent study by the  Digital Banking Report. 

Executives must center their communication on the vision for the technology and what employees will gain from it. For the employees resistant to change or feel that there is no reason to change their processes, management must explain the benefits of implementing new software. Will it make their jobs easier? Will they be more successful? Will they spend less time on low-value tasks? 

“Change is hard for everybody, but if you can explain why change has to occur and how that change can eventually benefit the group overall, it may not be easy, but it becomes easier,” said Rich Hoban, Director of Corporate Development at Frandsen Bank & Trust, in a recent description of how his financial institution successfully implemented technology. 

As an executive, consider asking questions like: 

  • What analytics and insights are missing in our reports? 
  • What customer service feature could we add to get an edge over other banks or credit unions? 
  • How could we make our lenders’ jobs easier? 
  • What current pain points could we eliminate with the right vendor? 
  • What processes could be automated? 

Use data points to solidify your vision and determine the right vendor to help realize your institution’s goals. Begin communicating your vision to the institution’s employees early and often to plant the seeds for understanding and buy-in. 

 

A partner, not just a vendor

Ensure alignment with the fintech

The Federal Reserve found that most bankers preferred to work with fintechs that "understand what it means to be a fiduciary and a financial services partner." For banks and credit unions, this often means a deep understanding of regulations and compliance and adhering to the institution's risk management standards. When assessing the strength of a potential fintech partnership, consider how the technology can be configured to meet the institution’s appetite for risk and how (or if) that technology will provide ongoing changes to meet the ever-changing regulatory environment. Having a technology that will continue to grow with the bank or credit union is essential to the longevity of a fintech partnership. 

Customer support is another fundamental piece to fostering alignment with a fintech vendor. When assessing a potential fintech partnership, explore how the vendor will help with integration, training, and ongoing post-implementation success. Are there added fees involved for training? How easy is it to access assistance from the vendor? Alignment with the fintech partnership doesn't end when the institution implements the technology. A good fintech vendor will continue to have the financial institution's best interests in mind, providing ongoing assistance throughout the partnership.  

Following a successful partnership with Abrigo the Paycheck Protection Program and seeing the benefits of digitalization, Capital City Bank expanded its relationship with Abrigo to transform its lending process processes with the Abrigo Loan Origination System (LOS). A key reason for the expanded partnership came down to these alignment factors. 

“It’s cloud-based, so it’s easy to make changes on the fly,” said Daniel Fowler, a Credit Administrator at Capital City Bank. 

And while the digital touch is a big advantage, Abrigo’s implementation and support  teams have been an integral resource to the bank. “The support we get from Abrigo is a huge factor. Abrigo is more like a partner to us than a vendor or software provider.”  

You might also like this podcast: "Software Customization or Configuration: Does it Matter for LOS?"

Consider the big picture

Take a thoughtful approach to connectivity

The fintech market is growing exponentially, and it can feel overwhelming trying to decide which vendor would be the best partner for the financial institution. Price is often a significant factor when deciding on a fintech vendor. While many financial institutions will price-compare vendors, they may neglect to consider potential hidden costs, especially when managing multiple vendors. In the Federal Reserve report, bankers emphasized the importance of eliminating siloed processes and ensuring that information can flow seamlessly across systems. Financial institutions should be cautious about taking a “Frankenstein” approach, which piecemeals systems and lacks cohesion. 

Financial institutions should take a forward-looking approach to fintech relationships. In the report, bankers noted that it may be helpful to envision “an end-to-end automated process, where an output of one system serves as an input to another without manual interference.” Rather than purchasing individual products to solve problems ad-hoc, consider the bigger picture and how a different vendor may be able to consolidate the systems the institution is using, enabling greater transparency and data insights. This thoughtful approach to connectivity could vastly improve efficiency and save your institution money in the long run.  

Fintech partnerships can be complex and intimidating, but they will play an integral role in financial institutions’ ability to compete and grow in this evolving landscape. Financial institutions should strive to master these three elements to build a solid foundation for successful fintech partnerships in 2022 and beyond.   

Make the most out of your fintech partnership.
7 Steps for a Successful Software Implementation

Download Guide
Blog
Ag Lending Commercial Lending Construction Lending Consumer Lending CRE Lending Lending & Credit Risk Loan Origination System Member Business Lending Small Business Lending

The 7 Keys to successful lending: Strategies to grow business at your bank

Learn More
Blog
Ag Lending Lending & Credit Risk

Cultivate a better ag lending process: 7 best practices

Learn More
Webinar
Commercial Lending Credit Analysis Training Credit Risk Management Lending & Credit Risk

Commercial credit conundrums: Top issues and where to focus your efforts

Learn More
About the Author

Kylee Wooten

Media Relations Manager
Kylee manages and writes articles, creates digital content, and assists in media relations efforts

Full Bio

About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

Make Big Things Happen.