This article was written by Stephen Sheinbaum who is the founder of Bizfi.
Small banks are the bedrock of businesses in many communities all across America. They are on Main Street with the businesses they serve, and they have relationships with these businesses that go well beyond the bank’s four walls.
As technology continues to drive more and more aspects of financial services, small banks have found themselves at an increasing disadvantage. They simply haven’t had the resources or the technological expertise needed to keep pace with modern lending.
Over the last year, there have been several collaborations between large banks and financial technology companies. Now, those collaborations are happening between fintech and small banks as well.
Traditional financial institutions have begun to see the value of collaborating with these new financial players, which use intuitive, adaptive, mobile and cloud-based processes to deliver a smoother customer experience. Fintech systems, which are increasingly delivered to partners through application program interfaces (APIs) and other white-label approaches, can be added to a bank’s systems without a lengthy, costly technology overhaul.
As more small banks map out a fintech alliance, there are three things they should focus on:
Fintech companies and their partners should map out exactly how their new relationship will benefit not only each other, but the banks’ clients as well. This means developing marketing kits to outline the services the partnership will provide to customers, like quick access to bank records, faster funding applications and nearly instant disbursements.
The marketing kit should also include press releases the small bank can distribute to its local media outlets and a calendar of social media posts on the new services.
The Participants in Forex Trading and their Role in the MarketGo to article >>
Fintech firms should send a team of their best underwriters and sales employees to the small banks that have become their partners. The fintech teams should listen to all the customer issues the banks are having and work to address them.
This gives the fintech companies an opportunity to learn which funding products might be in most demand, and make any refinements necessary to increase their usage in the local market. Do the majority of the bank’s customers speak a language other than English? If so, funding products will need to be translated, and the fintech companies should be able to adjust their technology accordingly.
Fill in the gaps
What’s perhaps most important when it comes to a partnership is for each side to understand the other half’s business and to see where they can help each other.
Fintech companies have been growing their operations through partnerships with companies that can provide a variety of services to small businesses from accounting and credit checks, to invoicing and website development.
These partnerships can and should be extended to small bank partners—and their customers as well. Meanwhile, small banks can keep their ear to the ground on local economic concerns and business niches. Listen, and learn.