Financial Services cannot be delivered under a single organisation anymore - customers are demanding services that are more relevant, more connected, and more embedded in everyday experiences. To meet these expectations, collaboration through partnerships is fundamental for the industry, and we firmly believe that the right partnerships between the right players have the power to completely transform financial services.
However, according to the World FinTech 2020 Report, 70% of FinTechs say they are frustrated with the processes and barriers of incumbent institutions when collaborating. So how do we unlock and accelerate the creation of FinTech ecosystems to create commercial success as well as good customer outcomes?
We were delighted to be joined by panelists from across the industry to explore this topic as part of UK FinTech Week. In this article, the second in the series exploring insights from our four FinTech Week events, I am pleased to share some of the key themes discussed and reflect on what they mean for the digital future of the industry.
As referenced in the first blog of this series, it is financial services organisations that have put the customer first that have shown resilience in navigating the pandemic. To succeed going forward, organisations need to shift their focus from developing products to delivering customer outcomes, and think beyond the immediate context - the customer expects a seamless experience where financial services are invisible and integrated, whether they are setting up a new account or buying a new home.
The Tysl platform, demoed during the event, is an example of the power of the ecosystem to enhance customer experiences across a complete end-to-end journey, showing how through partnership the industry can both guide and service the customer seamlessly.
While the potential of partnerships for the future of the industry is clear, navigating the complex and increasingly crowded landscape is hard. To be successful, organisations need to understand their bounds - focusing on doing what they do well and working through partnerships to expand their horizons and make the whole better than the sum of the parts.
Compared to trying to innovate alone, a strengths-based approach to partnership unlocks progress and better outcomes for both customers and organisations themselves - whether in terms of experience, cost, security or innovation. Also important is the recognition that ‘sometimes you don’t have to change the world - you just have to make the world better and cheaper and that can make a very successful partnership’.
Aside from having a value-adding solution to a problem that needs solving, the critical foundations of strong partnerships are alignment, trust and flexibility. While there is no ‘magic dust’ to success, ensuring alignment around core elements such as vision, outcomes, and cultural fit, and investing the time upfront to define these and have the challenging conversations goes a long way.
Building trust through communication is especially key given the regulated environment where customer data needs protecting. And with the significant amount of give-and-take required to build a successful relationship, flexibility and consideration of the balances of power between incumbent and innovation need careful consideration.
While the benefits of partnerships between incumbents and FinTechs might be clear - whether unlocking speed to market, providing access to funding, enhancing functionality, or expanding market reach - building relationships across the wider ecosystem can be equally important. For instance, partnering with universities and academic institutions can unlock insight into future innovations and help understand the potential impact of new trends such as hyper-personalisation. At the same time, partnering with regional bodies can also inform local skills initiatives, ensuring rich talent pools to enable the servicing of future customer needs. The importance of exploring partnerships beyond financial services is a theme that we will pick up in our future blog about scaling FinTechs for success.
The next in this series of articles will pick up on the theme of alignment, trust and flexibility as it explores the characteristics that underpin the most successful FinTech Deals, and looks at how investors and FinTechs can work together to create sustainable value and growth.