Forming Strategic Partnerships with FinTech Providers that Offer Options

Steven McKean 2021-05-03 10:05

How Partnership Programs Are Helping Financial Services Firms Be Successful in the Digital Marketplace

Recently, financial services firms have searched for ways to amplify digital innovations – offering new solutions that create more stickiness to retain existing customers and attract new consumers – to remain competitive in the digital marketplace.

Successful marketplaces are disrupting the market by meeting consumers where they already are in their financial journey and delivering tailored solutions to fulfill the specific needs of consumers– offering services such as insurance, financing and banking. For financial services firms to be successful and win in the digital marketplace, they will need to “develop sustainable marketplace strategies as part of a broader channel strategy,” as reported by McKinsey & Company.

In developing these strategies, these firms should consider strategic partnerships that will be critical to stay ahead of the competition –seeking out solutions that will support shifting consumer demands, offer more value-added service offerings, provide an opportunity for new revenue streams and promote a continually evolving tech-enabled ecosystem. Whether these firms are in the top ten or are smaller in size, it’s important to consider strategic partnerships with fintechs and technology providers as a way to accomplish a better digital transformation at the institution.

Why?

Well, customers and institutions are both reaping the benefits from these partnerships.

For customers, these partnerships bring a better customer experience, access to new services and an expansion of knowledge that their institution helps provide. For institutions, these partnerships help grow non-interest income and expand service offerings – helping institutions stand out among the competition as well as helping consumers improve their financial wellness journey.

Forging a New Strategic Partnership

According to The Financial Brand, financial services companies should leverage “a combination of technology, data and partnering” to help meet the growing needs of consumers, offering innovations and solutions to help consumers manage their everyday financial health.

For top 10 financial institutions, spending money on creating technology solutions or forging a new strategic partnership to put them ahead of the competition doesn’t seem like a big deal. These institutions have more resources (money, employees, time, etc.) to back up these efforts, so partnering with a technology provider that offers an in-depth application programming interface (API) integration can be a breeze for this size institution. Most of these larger firms are already expecting to put money, time and effort into these types of partnerships, all to enhance their relationships with their customers.

Not to mention, for firms of this size, the right partner should have developed a solution that is designed with the institutions’ ease of integration and maintenance in mind – built with intuitive APIs for swift integrations and backed with extensive use case examples as well as a robust line of product, development, and engineering support. This type of partnership should give institutions more flexibility on how to deploy the service to consumers from a co-branded solution to a white-labeled service that is hosted directly through the bank – strengthening the institution/customer relationship, providing cost reduction and generating additional non-interest revenue.

However, for many smaller institutions, fintechs, PFMs, insurance firms and more, it can be near impossible to develop new digital offerings and create their own technology solutions or to dive deep into a strategic partnership that requires a full-scale API integration. In fact, Forbes explains that banks spend tons (literally) on technology and even states that “information points to a growing gap between the largest and smallest banks, and how much they can afford to invest in and develop new technologies.”

That’s why it’s critical for smaller institutions to seek technology partners that offer options to help them be successful in the digital marketplace, close the growing gap between the megabanks and the smaller financial services firms and create a competitive edge that brings advantages to both the institution and the consumer. For firms of this size, it can be easier (and more cost-effective) to outsource these efforts, which has led many financial services firms to partner with fintechs and technology providers that present a way to add innovative services to their arsenal of services and offerings – through a partner program.

Additionally, low-code, embedded widgets are another option for smaller financial services firms to advance digital transformation. This option offers new access to firms that would otherwise be unable to compete with their larger counterparts, enabling these new entrants to find success in the digital marketplace.

According to Bank Automation News, these widgets eliminate traditional friction points and are the key to meeting rising consumer demands as well as remaining competitive in the financial services landscape.

For smaller and mid-sized firms, finding the right strategic partner allows these companies plug into innovation and provide immediate value to customers through the digital channel, helping strengthen the customer relationship. For example, a large majority of Americans are paying too much on their monthly bills, and no one wants to overpay for their recurring bills – consumers want access to money-saving solutions that can help improve their financial wellness journeys.

Fintech Partnerships to Offer Innovative Solutions

Banks, credit unions, PFMs, fintechs and more need innovative options – such as API integrations, partner programs and low-code, embedded widgets– to transform from an advisor to a trusted consumer advocate by offering innovative solutions, like a bill negotiation, subscription management or insurance rate check service, to actually help customers save money – while also expanding service offerings that can help financial services firms find success in the digital marketplace.

How?

Well, many monthly bills have plenty of room for negotiation, especially considering these services usually have competition, which means bills such as cable, internet, phones, alarms, gym memberships and more are all usually able to be negotiated. When it comes to subscription management, many consumers grossly underestimate how much they are spending on these services and are paying for many monthly subscriptions that go unused or are simply unwanted. In fact, “one in 10 millennials spend $200 or more every month on subscription services,” according to MarketWatch. Plus, insurance rates for home and auto plans fluctuate constantly, but unless customers are paying attention, they’ll miss out on getting the best deal.

However, people typically don’t realize these savings opportunities even exist, let alone have the time to make call or go online to make changes to these services that have a significant impact on their finances. That’s where companies in the financial services space and their technology partners come in the picture.

These firms are uniquely positioned as they already have access to consumer information, transactions and more importantly attention (as measured by logins to mobile apps). With the right partner, these companies can pair saving opportunities with the transaction, improving the consumer’s overall financial wellbeing by making managing bills, canceling unwanted subscriptions and lowering insurance costs a seamless, frictionless experience.

Not only are there incredible benefits for consumers, but partner programs also bring significant benefits for these firms, including longer and more frequent customer engagement, improved customer satisfaction and net promoter scores, a new direct revenue stream as well as an indirect revenue stream by redirecting customer savings into existing, native products.

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For instance, Gabi, a digital agency that offers a home and auto insurance marketplace experience, leverages customers’ current insurance account details. In doing so they pull the necessary details to then find a better rate between 40+ top insurance companies on the same exact coverage.

A large portion of Gabi’s distribution is through strategic partnerships with brand alignment to offer shared customers the savings opportunity. “Our partner program helps us distribute in the right places to ultimately provide the best customer experience for our partners’ users delivering savings for the customer and great economics for the partners. The link-out affiliate model of the past is focused on economics for companies, not experiences for consumers. We’re focusing on embedded relationships providing incremental value to our partners’ user bases,” said Nick Fairbarn, Chief Marketing Officer at Gabi Personal Insurance Agency, Inc.

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Forming strategic partnerships can be advantageous for even the largest institutions. That’s why financial services firms need a partner that has options for institutions of all sizes. Ultimately, for smaller and mid-sized firms to be successful in the digital marketplace, a partner that offers an affiliate partner program can be critical because these programs are the perfect way for small-to-mid-sized firms to compete in the financial services marketplace while also strengthening their customer relationships.

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