"Bank and Fintech Collaboration Blueprint": A step-by-step approach for financial institutions and technological innovators
In today's rapidly evolving financial landscape, banks are faced with the challenge of adapting swiftly to market disruptions. Deniz Johnson, COO at Stratyfy, emphasizes the importance of strategic fintech partnerships in this journey.
The "drop" phase signifies survival in a crisis, where banks must adapt and find a way out. This survival and growth hinge on a bank's ability to determine the best course of action to continue serving customers, while overcoming the limitations of legacy infrastructure.
The "roll" phase follows, focusing on separating from the fire, strengthening institutional foundations, and advancing the broader economic engine. In an industry shaped by change, the ability to adapt and choose the right partners may be the most valuable asset of all.
70% of bank IT budgets are allocated to maintaining legacy tech, but the "drop" phase isn't about abandoning these systems. Instead, it's about strategically shedding the barriers for fintech collaborations. These partnerships unlock tools that support smarter decision-making and more personalized, inclusive service.
Fintech partnerships can help economies grow faster and more vigorously when prosperity is more equally distributed, as they can help reach new communities and responsibly scale credit offerings. Strategic collaboration with bank-enabling fintechs allows financial institutions to reorient toward long-term objectives like improving access to credit.
Banks navigating market disruptions should focus on several strategic approaches. Embracing fintech partnerships strategically involves identifying key areas for collaboration, improving time to market, and enhancing operational efficiency.
1. **Identify Key Areas for Collaboration**: Banks should partner with fintech companies in areas where it makes strategic sense, such as financial infrastructure, to leverage their expertise and speed up innovation.
2. **Improve Time to Market**: Fintech partnerships can accelerate the time to market for new products and services, allowing banks to stay competitive in a rapidly changing landscape.
3. **Enhance Operational Efficiency**: By integrating fintech solutions, banks can reduce operational and regulatory burdens, thereby improving efficiency.
Shedding legacy constraints requires modernizing core systems, optimizing technology stacks, and implementing AI-powered solutions.
1. **Modernize Core Systems**: Regularly assess and update core banking systems to support evolving digital strategies. This includes integrating AI and ensuring real-time payment capabilities.
2. **Optimize Technology Stacks**: Understand and optimize existing technology stacks to prevent tech debt and guide effective investments.
3. **Implement AI-Powered Solutions**: Use AI to automate processes, improving efficiency without disrupting existing systems.
Future-proofing the organization involves focusing on digital account opening, developing strategic partnerships, and emphasizing innovation and experimentation.
1. **Focus on Digital Account Opening**: Embedding fintech into digital account opening processes can enhance efficiency and user experience, which is emerging as a key growth area.
2. **Develop Strategic Partnerships**: Treat fintech partners as long-term collaborators, setting clear expectations and ensuring compliance and regulatory adaptability.
3. **Emphasize Innovation and Experimentation**: Encourage experimentation with AI and digital assets to stay ahead of market trends.
By adopting these strategies, banks can effectively harness fintech partnerships to adapt to market disruptions and build a resilient future. The "stop" phase is about developing the clarity required for strategic decision-making, including creating business objectives, evaluating internal infrastructure, identifying operational inefficiencies, and aligning on key priorities. A key step for banks in the "drop" phase is to examine their most valuable assets, oftentimes their data, to ensure its accessibility and usability to prepare for future technology partnerships.
In the "drop" phase, banks should identify key areas for fintech collaboration, such as financial infrastructure, to strategically leverage fintech expertise and speed up innovation, thereby enhancing operational efficiency. By adopting AI-powered solutions and optimizing technology stacks, banks can shed legacy constraints, modernize core systems, and improve the efficiency of digital account opening processes. In the pursuit of a resilient future, banks should develop strategic partnerships and emphasize innovation and experimentation, as these partnerships can help grow economies more vigorously and responsibly scale credit offerings. The "drop" phase requires banks to examine their data to ensure its accessibility and usability, preparing for future technology partnerships and driving strategic decision-making.
