Banks admit it — they are annoying fintech partners. There are the layers upon layers of compliance, the cautious corporate cultures, and the relentless focus on efficiency.

It's no wonder, then, that Jennifer Lucas, senior vice president of corporate strategy at SunTrust Banks in Atlanta, says five people emailed her a recent American Banker article about how banks make notoriously bad fintech partners.

But, bank executives counter, fintechs are no treat either.

Over the past two days at an industry conference in New York, several bankers have shared their perspectives on the ongoing convergence of upstart financial firms and big banks. Between jokes about the culture clashes that fintech partnerships have sparked — cue the wisecracks about hoodies and pingpong tables, or the more cutting reference to the “blessed children” in innovation labs — a theme has emerged: The seemingly imperfect unions make both sectors stronger.

A good image for showing opposites attract,  a tense relationship, tough love relationship, etc.
Guess who's the bank?
The odd-couple relationships between banks and fintech firms make both stronger, with bankers providing a dose of tough love about how to operate in a massive, highly regulated industry, according to executives from KeyCorp, Citigroup and others.

Being an “intrusive” business partner is an essential part of a banker’s role in the relationship, said Kenneth Gavrity, head of enterprise payments at KeyCorp. The Cleveland company has launched several fintech arrangements in recent months, including taking an equity stake in Billtrust, which provides digitized accounts receivable services.

“I’m very deliberate at the beginning to say, I’m going to have a very intrusive relationship with you if we’re going to have this — and you want me to have a very intrusive relationship with you,” Gavrity said. He noted that after he announces a new partnership, emails “come flying” from regulators with questions.

To manage risk and protect customers, a big part of the bank’s job is to build a “governance structure” on top of the technology that fintech executives have built.

“You have never had a partnership like this. You haven’t imagined a partnership like this unless you’ve already partnered with a bank,” Gavrity said in describing the tough-love relationship he tries to establish at the outset with tech collaborators. “And the initial reaction from the room is usually one of fear.”

Citigroup, likewise, has rigorous third-party standards in place, said Chris Chazin, its director of emerging payments and channels. The friction that arises from those is just part of the innovation process, he said.

“In some ways, we’re tapping into these partnerships because they are making our organization less comfortable,” Chazin said. “The expertise they bring does create internal conflict that has to be managed, but it requires an ongoing education.”

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"You haven’t imagined a partnership like this unless you’ve already partnered with a bank.”

Throughout the conference, which took place at the Pierre Hotel in Manhattan and was sponsored by The Clearing House, bankers nonetheless emphasized the importance of pushing their companies to experiment with new technology. Many said they are aware of how difficult they can be to work with.

Bankers also said that a key part of their role in fintech partnerships is simply educating tech executives about what, exactly, banks do.

Peter Davey, head of innovation at The Clearing House, said that attendees at a fintech conference late last month came and asked him about his organization.

“When we tell them that we actually clear and settle payments, they’re like, ‘That’s so cool,’ ” Davey said.

Kristin Broughton

Kristin Broughton

Kristin Broughton is a reporter for American Banker, where she writes about the business of national and regional banking.