Learnings for lasting cooperation between fintech and incumbents

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Sunil JhambCEO and Founder of WLPaymentssharing key lessons for lasting cooperation between fintech companies and incumbents.

“If you can’t beat them, join them” – this old adage also applies to the financial sector. In the early days of fintech, there were a lot of stories about how these nimble, failing, fast-scaling new tech companies would wipe out incumbents. Not so much anymore.

In some sectors, like online payments, fintech has become a force to be reckoned with, often reaching valuations that traditional financial companies can only dream of. But the big old banks and insurers are still there and, in some cases, even more profitable than before.

Still, incumbents learn a lot from the fintech industry. Fintech is zealously focused on eliminating friction. By adopting an ease-of-use approach, these companies deliver solutions that add value to their customers. Combined with an exceptionally technically skilled workforce, they can deliver faster and cheaper solutions based on data, API and cloud.

The incumbents, for their part, also have something to contribute. Banks are used to constant change and the introduction of regulations, and their experience and knowledge could help fintech overcome these obstacles. In addition, traditional companies can offer a very attractive brand name and customer base for fintech companies.

Tradition meets innovation

So, the idiom mentioned above holds true for both incumbents and the fintech industry. We see a strong trend of cooperation between incumbent financial companies such as banks, insurers and fintech companies. Banks are acquiring fintech companies, investing in this space and sponsoring popular fintech startup accelerators – and more and more often we see fruitful cooperations between these different types of companies (by nature).

How do traditional and fintech technologies work in a successful partnership?

Here are some of the most important success factors we encounter as fintechs when working with more traditional companies.

Adaptation to old systems

Legacy systems make it harder to interface with other systems and prevent banks from quickly innovating and delivering new services, products or experiences to customers. This means we’ve invested heavily in developing easy-to-integrate APIs that allow traditional businesses to build on their current legacy infrastructure without hassle.

Eye for governance

When partnering with a fintech, traditional companies need the certainty that the provider can meet the regulatory obligations that come with the industry in which they operate. In addition to legal risk, there is transformation risk where the operations of financial institutions run some, albeit low, risk. For us, that means maintaining the utmost integrity and avoiding shortcuts. We try to assure our partners with our industry certifications and our pedigree in previous partnerships that this risk is well managed.

Teamwork makes you dream

The key to a successful partnership is a thorough initial assessment and a well-managed project start-up. There needs to be a good understanding of what each party can expect regarding response times, linkages with different departments, and management support. The difference in culture or “DNA” must be addressed and discussed before entering into a partnership.

Flexibility in the face of the unexpected

As a technology company, you like to think that your technology and your solutions are the best. And you should. But working with legacy partners means you have to have the flexibility to change course. Sometimes this leads to co-developing new technology standards and innovations that you might not have anticipated.

Other important issues to consider regarding the partnership between fintech and incumbent financial firms are working on a strong business case, keeping talent and knowledge on board, and asking the crucial question: what do we do? us if things don’t work out?

Relationships that stand the test of time

Our experience and external research shows that traditional banks seek to improve the customer experience rather than introduce new or better products. There are many opportunities to add value to this as a technology partner. Having access to data that shows customer behavior and choices will provide valuable insights – and being part of a large network within the tech industry provides relevant insights and the opportunity to suggest and create better ways to serve the clients.

Fintech meets fintech

Many of the elements mentioned are relevant in other types of partnerships. We also have great experiences working with other fintech companies. Sure, the lines are shorter, decision-making goes faster, and we speak the same language – but things like good governance, alignment of roadmaps, and a focus on teamwork are always relevant to make this type of partnership a success.

We see a great future ahead of us, where collaboration with traditional enterprises and fintech will lead to better customer solutions. And that’s why we do it!

About Sunil Jhamb

Sunil Jhamb is CEO and Founder of WLPayments, a trusted global payment platform. Sunil has over 20 years of consulting and strategy experience, and as the winner of MPE Influencer of the Year 2019, Sunil is an authority on international payments. Prior to that, Sunil founded Newgen Payments and worked at GlobalCollect as Director of Global Planning and Strategy, developing corporate strategies and driving revenue opportunities globally.

About WLPayments

WLPayments offers an acquirer-independent payment orchestration platform for ISOs, PSPs, acquirers, banks and online merchants. WLPayments offers its partners a modern and modular platform with many innovative and conversion-boosting features, taking care of all their payment issues.

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