Trends in Fintech Collaboration: Start With The User Experience

As banks and credit unions increasingly consider partnering with fintech firms, the main motivation is usually around enhancing the consumer experience. This is achieved through greater use of consumer insights and deployment of advanced technologies.

In reviewing several recently announced banking and fintech partnerships, it becomes clear that addressing the consumer experience is a core motivating factor. Certainly the strategic rationale for collaboration is much broader: financial institutions pursuing revenue synergies, market expansion, or even access to innovation from partnerships. However, in today’s digital-first world, user experience is increasingly guiding collaboration decisions as much as individual product, market, or growth considerations.

A top-10 bank in the US, for example, recently integrated third-party vehicle financing and leasing technology within its online banking site. With the tool, consumers select vehicle and dealership, apply for and receive loan decisions in minutes, and then close the loan at the dealership. From the bank’s perspective, the partnership accelerates time to revenue and inserts digital end-to-end decision making within the loan process. From the user’s perspective, a far simplified vehicle buying experience is made possible by the bank.

The joint solution squarely addresses the current friction that exists in the car buying process. The loan application is paperless and occurs early in the buying process, which provides a refreshing banking experience and empowers the consumer prior to arriving at the dealership. This improved experience also translates to relevancy for the bank as the financial transaction is part of the purchase activity rather than a cumbersome afterthought at closing. Incidentally, in the six-line press release announcing this particular partnership, consumer experience was cited three times.

A new market for user experience is forming partially due to an increasingly open environment for information access and data sharing. This trend provides consumers more options and lowers the switching costs between providers. How should financial institutions approach this? Partnerships are typically part of a conversation in which the criteria for collaboration will increasingly include user experience in addition to desire for growth, market expansion, and efficiencies.

So, You Have Decided to Partner … Now What?

Paramount to the tactical aspects of how to implement a partnership is the customer journey. By understanding this, financial institutions are better positioned to address more than specific process enhancements and can approach collaboration with a more holistic mindset about the aggregate user experience, which ultimately should enhance lifetime value.

Visibility to the consumer journey may also identify opportunities from existing consumer behavior that have not yet been recognized by banks. For example, the most common mobile banking activity by users is to check account balances, yet do banks fully leverage this predictable and specific consumer behavior?

Given that 94% of all mobile banking users check their balances, banks have an opportunity to collaborate or internally develop solutions that may add relevance to this mundane task. Banks could be more proactive during this activity to help consumers who typically have a low balance, proceed to pay a bill, or can afford to save or invest more due to excess cash balances.

When considering collaboration for new services, a clear understanding of the consumer journey can also provide a partially independent view and help contrast this view with the current strategy. Business teams, development staff, or product management can often be so internally or product focused that they lose sight of whether they are truly addressing consumer needs. An outside view from the consumer standpoint provides a valuable assessment of individual products or technologies and can help identify gaps where partnerships may be a helpful part of the overall service.

Tactical Steps to Collaboration

Inclusion of the consumer journey throughout the integration process can contribute to aligning the product with consumer demand and also help ensure that consumer experience is represented. This consideration may also help the tactical aspects of integration stay on track. While there is no silver bullet for how to manage an integration, there are certain considerations to help guide the process:

  • Business case. A starting point is discovery and definition of the business case. Organizations should think critically about the relationships with their consumers and be candid about gaps in the business in order to identify areas for collaboration. Once a need is identified, development of the business case—rather than a technology project—helps frame the project plan, develop relevant metrics, quantify expected return, and identify risks. It also helps build the case to invest in new areas of innovation to achieve desired results.
  • Sponsorship. An often overlooked aspect in developing a strong partnership model is sponsor responsibility. For many organizations, partnership collaborations span technology, individual lines of business, vendor management processes, and compliance teams—meaning that gaps can arise without a complete view of the partnership. Often, a single supporter is beneficial to avoid gaps in the handoff and to adhere to timelines.
  • Execution. It goes without saying that the plan should be frictionless. A starting point is to be practical, making sure that the output reflects the promises of the plan. After all, execution of the strategy can be a differentiator for an organization and consistent assessment can help ensure that the project addresses the intention.

Clearly, many other crucial factors for a successful collaboration strategy should be considered, including security issues and cultural differences. Still, in a digital-first world where the measure of relevance is changing and technology is shifting power from institution to consumer, financial institutions should not overlook user experience as an important starting factor for collaboration and partnership.

Banking + Fintech: A Collaboration for Growth

The 72-page Banking + Fintech: A Collaboration for Growth Digital Banking Report sponsored by Microsoft in collaboration with Efma. provides insight into the progress being made by financial institutions globally in the area of fintech partnerships and innovation. Beyond an in-depth review of the competitive landscape, the report allows financial executives to better understand the impact of collaboration across all components of the financial services ecosystem. Julien Corbe was a contributor to this report.

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