As one of the leading Financial Technology (fintech) firms in Puerto Rico, Sol Partners understands the importance of strategic partnerships. Learn more about how these partnerships are formed, how they work, and the benefits of these corporate alliances.
The Changing Financial Landscape
At one time, innovative fintech firms like Sol Partners competed with their more traditional banking counterparts. More recently, however, many of these financial companies learned the value of working together. By recognizing their advantages, fintech organizations and financial firms, including banks, have learned to work together to improve customer experiences.
How Fintech Partnerships Are Formed
A recent Forbes article proclaimed there has been a “seismic shift in fintech and Big Banking's relationship.” Basically, the two are starting to partner together to provide better solutions for customers rather than acting independently. In the past, banks would rely on fintech but use language such as “working in partnership” to describe the relationship, according to a Fintech Finance report. More recently, the two have forged stronger relationships to play on their strengths and collaborate efficiently.
Banks and other established businesses are always on the lookout for innovative companies to work with in the fintech industry. Fintech firms and financial services companies (such as banking institutions) have been described as natural partners with “contrasting strengths that complement the other’s capabilities.”
Innovative fintech firms offer online and mobile solutions that are unparalleled. While larger banks partnering with fintech firms garners headlines, smaller community banks see these partnerships as a vital step forward, according to a recent American Banker article. Technological advances by fintech firms has made it easier to operate in the commercial lending space, which Jake Crews of Crews Banking Corp. describes as a “cumbersome thing for most institutions,” in the same article. As Business Insider reports on a recent survey, 87% of respondents said they were able to reduce costs by relying on fintech providers.
How They Work
Fintech firms like Sol Partners are innovators. Businesses gravitate toward our use of technology and are intrigued by our desire to shake up the financial sector. However, as a relatively new business, we understand that we don't have the enormous customer bases, long-term customer loyalty (especially with the baby boomer generation), comprehensive real-world infrastructure, or brand awareness that many banks do.
Partnering with these traditional financial institutions and other large corporations allows us to access these extensive resources so we can reach more people and give them better service.
We also rely on the experience of more established firms. Our partners help us navigate through layers of bureaucracy and cut through business red tape so we can focus on serving our customers better.
The Benefits to Consider
A 2016 Business Insider report outlined some of the benefits banks and fintech companies discover when they work together. It noted that 87 percent of banks that partnered with third-party fintech companies reduced their costs. Additionally, it noted that 54 percent of companies involved in these partnerships increased their revenues.
A more efficient and profitable financial sector is good for customers. When financial businesses thrive, they can pass the savings on to consumers, reducing their fees and offering other perks.
Writing for Forbes, René Lacerte, the founder of business payments platform Bill.com, declared that partnerships between fintech firms and large banks are "a matter of survival" and an effective way of "future-proofing the industry." Our partnerships help us and the firms we choose to do business with grow in a way that's unprecedented in the financial industry.
The Keys to Success
There are several key factors that determine whether partnerships between fintech firms and other organizations, especially banks, are successful.
The best partnerships between banks and fintech firms see banks investing in the right places. Traditionally, banks felt they should invest in their fintech partners. Over time, however, banks have seen the advantage of investing in measures that improve their ability to incorporate the partner's technology into their own business operations. This new way of investing improves the connection between the partners and is more fruitful in the long term.
Banks shouldn't engage their own technology with that of a fintech partner simply because they don't want to be left behind. Instead, the most successful partnerships occur when banks consider how a fintech's innovations will work with their business model and partner only with those organizations that provide the right fit. Similarly, companies should look beyond a bank's name and consider whether its values and business model align with theirs before partnering with them. That's why Sol Partners takes time to handpick the most appropriate businesses to become our business partners. While many of these are in the finance industry, we are open to exploring partnership opportunities with firms in a range of business sectors.
Sol Partners is proud to partner with some of the leading organizations in the U.S. Through our strategic partnerships, we continually aim to improve our business practices and the way we serve our customers.