How KeyBank's approach to fintechs set the tone for product development

Key Bank is launching KeyVAM, a virtual account management offering developed in partnership with fintech Qolo for treasury clients — a project that relied on a clear understanding of just what the word "partnership" meant to both parties.

The companies announced KeyVAM at American Banker's Payments Forum, taking place this week in Hollywood, Florida, where they discussed how the product came about.

KeyVAM's development occurs at a time when bank-fintech partnerships are facing heightened scrutiny from regulators, who are critical of the potential that such relationships have to weaken compliance with the Bank Secrecy Act or anti-money-laundering requirements.

Additionally, the 2023 banking crisis changed the project's priorities and expanded its scope. Key's ability to adapt to these changes, while making sure that the end result met its own standards without compromise, stemmed in large part from how it approached the relationship — and a fundamental distinction the bank makes between who is a vendor and who is a partner.

"The vendor is the individual that you look to the contract and say, 'Hey, you said you would do X, Y and Z.' The partner is the one you can pick up the phone, and you have a deeper operating relationship with them, and you can navigate the problems," said Jon Briggs, executive vice president and head of Cleveland-based KeyBank's commercial product, in a panel discussion at Payments Forum.

KeyVAM is designed for treasury management clients with complex demand deposit account structures to use to streamline cash flow and account structure. It enables users to manage multiple clients or cost centers, and open and close subaccounts through a link to KeyNavigator, the bank's online commercial banking system.

The entire project took 15 months to launch — including a big expansion brought on by the 2023 banking crisis.

"If you were to ask me what our roadmap was like … in January of last year versus what it was like in April, it was fundamentally different, and that was true for this project as well," Briggs said. The project's scope had been much narrower, but the crisis emphasized the importance of deposit growth for the bank.

"We're going to need an enduring way to be able to compete for deposits" beyond just competing on prices or rates, he said. The KeyVAM project offered a way to win business accounts by offering a compelling technology to depositors, he said.

"And so with that, we've massively expanded the scope and the use cases that we're trying to tackle," Briggs said.

On Qolo's part, the Ft. Lauderdale, Florida fintech had never had a bank as a client before, and the demands of working with one were daunting.

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"We're a venture-backed company and, going into the bank vertical, there was a big sigh of, 'Why, what are you thinking?'" Patricia Montesi, Qolo's CEO, recalled during the panel discussion.

Qolo did have prior sponsor-bank relationships that gave it a level of risk and compliance expertise, but Montesi acknowledged that the demands of working with Key as a client would be much higher.

And in many instances, the only way to do things was Key's way.

"Qolo, like other fintechs, they have integrated risk services and when you're working with most banks of our size and scale, we're like, 'no, we have that risk service so you will be integrating and consuming our risk service … into your platform,'" Briggs said.

"Having a partner that understands that and how to navigate it is critical in terms of making a project of this magnitude go as smoothly as possible," he said.

The companies' relationship is an example of emphasizing the importance of a cultural fit as much as a technological one, according to Aaron McPherson, principal at AFM Consulting.

"We are at a place now where fintech bank relationships have been through a few cycles, and lessons have been learned that make the relationship less of a vendor relationship and more of a partnership. … A key element is cultural fit," McPherson said.

To accomplish this, the bank must look internally to quell any conflict that may stem from its own technology developers.

"Usually, there is competition from the internal IT staff, and a 'not invented here' mentality that does not seem to have been a factor in this case," McPherson said. "I have seen other bank-fintech partnerships of this kind, and the cultural issues are of critical importance to a successful outcome. … It's not so much a technology challenge as a people challenge."