Punching Up: How to Compete Using a Banking Technology Partner Ecosystem
Rather than guessing which fintech partners to tagteam with, successful institutions are taking a methodical approach: examining their own customer data to spot service gaps, studying what's working for similar competitors, and anticipating future needs. Banks like OneUnited are already seeing results, with strategic API integrations boosting customer engagement by 33% in just one month. But, you don't need a massive tech budget to deliver cutting-edge experiences — you just need to choose the right partners and integrate them smartly.
By Mark B. Egan
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In the era of open banking, community banks and credit unions know that they could — and probably should — be doing more to take advantage of what’s possible. Partnering with fintechs to diversify offerings and drive growth has become essential in today’s marketplace — “critical to ensuring community banks remain vibrant,” as one Federal Reserve Board member put it.
Indeed, regulators have been urging small financial institutions to get off the sidelines for the better part of a decade. Along the way, the competitive landscape has only intensified: As consumer expectations for digital convenience have soared, fintechs have continued to fill the gaps — bringing intuitive interfaces, rapid innovation cycles, and targeted services that would be too costly for traditional institutions to match on their own.
The challenge now isn’t whether to partner, but where to begin. The range of potential collaborators — spanning fintechs, tech vendors, and many other nonbank financial providers — has expanded dramatically, leaving many institutions facing a paradox of choice: With so many options, how do we choose the right path?
To answer that question effectively, banks and credit unions should take a fact-based, data-informed approach — assembling a clear, comprehensive view of their own operations to guide their partnership decisions. That means conducting a candid assessment of core strengths and limitations, analyzing the strategies and offerings of peers and competitors, and anticipating what their customers will want — and expect — over the next three to five years.
A three-dimensional approach like this sounds elaborate, but doesn’t have to be — and it can give a financial institution a meaningful leg-up as it shapes its partnership strategy.
Want more insights like this? Check out Candescent’s content portal: Illuminating Insights in Digital-First Banking
First, Look Inward
Before exploring potential partnerships, banks and credit unions need a clear picture of where their offerings fall short. It’s critical to capture, and hear, customer feedback, and reevaluate your product and service offerings through the lens of their expectations. Are small business clients asking for tools you don’t yet provide? Are younger customers turning elsewhere for payment or borrowing features? This is an opportunity to move beyond your traditional perception of your institution’s role and focus instead on your customers, and their full range of needs.
One of the most effective ways to uncover those needs is by examining your own data inflows and outflows. Which aggregators are scraping or accessing your customers’ data? What third-party platforms are they using to move money, borrow, or invest? Kyle King is head of product for digital banking at Candescent — a technology provider with 1,300 digital banking, account opening, and digital branch customers that was formerly part of NCR Voyix. “By looking at what these aggregators are doing,” King says, “we can determine which features and functionalities users are looking for outside of their ecosystem — which can directly drive a recommendation for how a financial institution can respond.”
This kind of analysis can be challenging — especially when data lives in separate systems — but the insights are worth the effort. Patterns in external connections often highlight service gaps, reveal demand trends, and suggest where deeper engagement is possible.
This same analysis can also spotlight how — and how often — your customers engage with competitors. A customer might keep their direct deposit with your institution but turn to an app like Cash App or Chime for peer payments or short-term credit. Or they may route funds to a robo-advisor each month, bypassing any wealth offerings you provide. These behaviors offer valuable clues for building a partnership strategy that aligns with how customers already live and bank.
Then, Look Outward
While insight into all competitor strategies is valuable, it’s most important to assess where you stand relative to peer institutions — those similar in scale, region, or mission. What services are they offering that you aren’t? How are they packaging those services, and what kinds of experiences are they creating around them? Ask yourself which third-party apps are showing up in competitor offerings — and whether they might resonate with your customer base. The goal isn’t to mimic competitors, but to understand what seems to be working, why it’s working, and whether it could work for you.
Smaller banks and credit unions may not have the ability to field large-scale competitor research or commission a “mystery shopping initiative,” but many have access to benchmarking resources through their platform providers or vendor relationships. Fintechs that provide extensible tools via open API developer portals will see the use of various features across the industry, and can provide insights. Understanding what others have successfully integrated can reveal which features or partnerships are gaining traction, whether that’s a financial literacy app, a personal finance planner, or a gamified savings tool.
“Because they’re all on our SaaS platform,” says Candescent’s Kyle King, “I can easily show an institution how they are growing compared to their peer cohorts, and how to grow or look more like those successful financial institutions.” These insights can sharpen your view of what’s possible — and help accelerate decisions around which partnerships or features to prioritize.
By comparing product portfolios, user behavior, and growth trends across institutions with similar profiles, leaders can spot patterns. In one case, a bank serving a high proportion of underbanked consumers identified an opportunity to boost engagement by offering targeted financial wellness tools already in use at a more successful institution with a similar mission.
Finally, Look Ahead
Looking inward and outward provides a clear picture of where you are — but looking ahead helps define where you need to go. A financial institution needs its product roadmap no less than a software company does. Those that succeed over the next few years will be those that anticipate emerging needs and position themselves to meet them with agility. That means not only identifying rising customer expectations, but also ensuring they have access to the infrastructure — or the ecosystem — to adopt and deploy new capabilities quickly.
A case in point is Boston-based OneUnited Bank, which has embraced a partner strategy as part of its ongoing digital transformation. With $650 million in assets and branches in Boston, Los Angeles, and Miami, and a digital banking platform, OneUnited Bank is a multi-year award-winning Community Development Financial Institution (CDFI) and the nation’s largest Black-owned financial institution.
Senior Vice President and Chief Information Officer James Slocum outlined the bank’s approach in a recent webinar hosted by The Financial Brand. “As we continue to strengthen our unique positioning as not only an FDIC-insured bank, but as a fintech ourselves, we need to be more flexible and nimble,” Slocum said. “And we expect the same from our partners.” Among other things, OneUnited built a personalized account-creation and onboarding experience using APIs and data extensions on Candescent’s ecosystem. That, and other services accessed through the platform — including instant digital card issuance, and financial wellness and literacy tools — helped the bank increase customer engagement by 33% in the first month, Slocum said.
Candescent’s King, who also spoke at the webinar, cited Candescent research to make a similar point about business banking. Analyzing behaviors of 14 million customers on its platform, the company found that some 80% of the business users had accounts connected to third-party invoicing and accounting vendors. When Candescent offered those users’ FIs access to an invoicing tool integrated with their bank accounts, deposits rose by 18%.
According to KPMG’s 2025 U.S. Banking Survey, forward-looking institutions are prioritizing capabilities that align with both customer expectations and operational resilience. These include real-time payments, seamless digital onboarding, AI-driven fraud detection, personalized financial guidance, and scalable cloud infrastructure. Cybersecurity remains a top concern, especially as digital interactions deepen and data-sharing expands. And banks are investing in generative AI — not only for customer-facing applications like chatbots, but also for internal use cases such as risk modeling and compliance monitoring.
Institutions don’t need to predict the future with certainty. But they do need to create the conditions that allow them to evolve in sync with it — whether that means adopting a modular platform, rethinking legacy contracts, or investing in partnerships that enable faster deployment cycles. The most important trait may not be foresight — but flexibility.
Punching Up
Community banks and credit unions face a pivotal challenge: redefining customer service in a world where expectations are being set by the biggest players in both technology and financial services. Smaller institutions don’t need billion-dollar budgets to compete, but they do need a strategy. A well thought-out partnership strategy is one way to stay in the game — making it possible to integrate best-in-class features, improve retention, and gain primacy.
A recent report by McKinsey, Unlocking the Value of Technology in Banking, reinforces this opportunity. Because most innovations are quickly commoditized, smaller institutions can deliver a high-quality digital experience without outspending their peers. “A large bank and a small bank can both have a mobile app with a 4.9 app store rating,” the report says, “even if the small bank’s technology spending is a tiny fraction of the big bank’s.” The takeaway: success depends less on the size of the tech budget and more on how effectively an institution selects and integrates the right tools.
As consumer needs shift and new use cases emerge, financial institutions will need the flexibility to respond. A strong partnership strategy, rooted in clear-eyed self-assessment and smart use of data, positions a bank to compete on experience, adapt quickly, and thrive in a fast-moving ecosystem.
