WOLF & CO Insights Enhancing the Quality of Fintech-Bank Partnerships

Enhancing the Quality of Fintech-Bank Partnerships

Earlier this year, I wrote a piece examining the many benefits of fintech-bank partnerships. From increased capital to product and service enhancement, the advantages of these relationships are stark. The COVID-19 pandemic has heightened banks’ need for fintech solutions to accommodate remote work, address cyber risks, and adapt to the “new normal.” Recognizing the potential in these alliances, many financial institutions and fintechs have started entering into partnerships—straying from their usual competition with each other.

Although these new partnerships show amazing advancement in both the fintech and financial industry, many of them aren’t built for lasting success and may end up falling apart before real progress is made. In order to build a successful partnership with a bank, fintechs need to adhere to certain protocols that encourage cohesion and support a productive endeavor. We take a look at some ways fintechs can set their partnerships up for success.

Build from the Base

Like any relationship, a healthy fintech-financial institution relationship is built on trust and understanding. This confidence comes from vulnerability and honesty. As a fintech, if you’re guarded about your product and tend to hide behind the argument of “proprietary innovation,” your prospective partner would be advised to be hesitant about the interaction, and may even back out of the transaction all together. Dishonesty with your partner will only lead to two observable outcomes:

  • Your time, as well as the bank’s time, is wasted; no progress is made in the transaction
  • There’s positive potential in the relationship, but examiners soon become involved to analyze what you’re hiding; the financial institution becomes wary of the relationship because examiners are involved and soon terminates the transaction

Even with honesty and full transparency, your partnership could potentially fail. However, if adhered to, these tips can give you a chance at a third outcome—success. So what does real transparency in these discussions actually look like? What will set your fintech company up for lasting progress?

1. Establish responsibilities and limitations from the start

We were recently approached by a financial institution to help with their fintech partnership. They wanted us to review the relationship and determine if the examiners might have any concerns. During our initial assessment, we discovered that their agreement didn’t detail any segregation of responsibilities or layout what limitations (if any) the technology solution or financial institution would apply to the relationship.

These crucial details should be determined by the financial institution during their due diligence process. However, at the end of the day, the bank can always exit the relationship to correct its own mistake—and as the fintech, you’re essentially powerless if they choose to do so.

Why take that risk? Include responsibility delegations for things like compliance disclosures and Bank Secrecy Act (BSA) reporting into your sales pitch and agreement to ensure clarity. Anything less is playing with fire.

2. Learn the language

Anyone who has worked with financial services and fintech companies knows that they often speak two different languages. And each fintech or financial institution usually has their own dialect within the language—making things even more complicated. Due to this discrepancy, partnerships between the two sometimes fail because neither side fully understands the needs, processes, and goals of the other. Communication mishaps can have catastrophic consequences for a relationship. As a fintech, it’s imperative that you learn the language and dialect of your partner.

3. Listen to what’s “wrong” with your product and be prepared to change what you can

Banks are creatures of habit and convenience, but hardly any of those habits are common across all institutions. So if you think the user journey that you built based on your experience at one institution is going to satisfy every bank partner, you may be mistaken.

In my nearly 15 years in banking, I’ve only interacted with one technology partner that understood this principle. In their terms and conditions, they stated that all changes requested by the institution and developed by the technology company would be rolled out universally to all financial institutions.

Why would they do this? Simply put, they realized that if Bank A was asking to do it one way, odds were good that Credit Union B might want it that way too. There’s also a good chance that another customer might have the same request or need, but didn’t think to ask for it. So to their company, it just made sense to change it once and make it part of the process. However, if a change was too specific or would alter the product too much, they knew when to say no.

While this sounds like “the customer is always right,” it’s actually more about ensuring that the product is always right for the customer. Granted, not everything about the product should change to satisfy the whims of customers and partners, but you’ll need to know when to accommodate and when to put your foot down.

4. Always tell the truth (about certain things)

In order to secure a partnership, fintechs may have to slightly skew reality to make themselves more appealing to financial institutions. For instance, they may adjust their answer on how long a technology or process takes to implement, what policies and procedures need to be adjusted to make the technology work properly, or their origin story and the financial industry experience of your team.

However, fintechs should never skew:

  • Approval from regulators
  • The number of financial industry customers using your platform
  • Your funding position and your potential financial viability as a partner

There are probably several other “never-shall-you-evers,” but if you’re stretching the details about the success of your company, you‘re putting yourself (and ultimately any relationship you gain) at risk.


For years, fintechs and financial institutions rode their own waves—content with staying in their lane and sticking to the status quo for the sake of stability. But the tides have started to turn, and both industries are getting a taste of the success that can come from an efficient partnership. But ensuring the effectiveness of these relationships requires delicate steps, and a lot of give and take. The amount of fintech-bank partnerships in the market is only going to increase, but to ensure the quality of those partnerships, fintechs should abide by these rules.