Among the things you'll learn:
- How banks and fintechs can partner on specific products and verticals.
- Best practices and advice on what to look for in a partnership.
- How to maintain and grow a partnership, pitfalls to avoid.
Transcription:
Ian P. Moloney (00:09):
So everybody for hanging out with us, we're right before happy hour. I know you can taste the drinks. I can as well. We will get through this wonderful topic of powerful partnerships, how banks and fintechs collaborate for success. And so this is the third session within the bank FinTech track. And so I know we've had a lot of conversation about regulations, a lot of conversation about strategically thinking this is going to be more of a conversation around operational operationally, what you should be thinking of, how to manage some challenges and really what to do to build that partnership up. So without further ado, as the one speaking right now, I'm Ian Maloney, I'm senior vice President, head of policy and regulatory Affairs. This was mentioned of the American FinTech Council and so this issue is very important to us because we represent at ASC as a trade association both fintechs and banks. And so getting the partnership conversation right is really important to us from a policy standpoint and from an ecosystem standpoint. So I'll pause my speaking for a moment and frame it up for the wonderful panelists that I have. We can go through a quick tale of the tape going from my right to the end of the line, but while you're giving a tale of the tape, it'd be helpful to understand as you're engaging with banks or fintechs, whatever partner you're looking at, what's a red flag, what's a green flag that you're looking for?
Christian Santaniello (01:37):
Sure. Thanks very much. Appreciate the opportunity to be here. I'm Christian Santaniello. I work at Axos Bank. We're a $24 billion digital bank headquartered in San Diego. I'm based out of our Los Angeles office. This is certainly a topic that I had near and dear to my heart on a daily basis. So I think what I'd offer up in terms of a red flag, green flag, I'll actually pick the same topic and apply it to both, which is gaps or shortcoming. So I think in any partnership there's a good chance there may be some gap or shortcoming on one side or maybe both sides. And so I think if you're going into a partnership on the other side is a gap or shortcoming and they see this partnership as a way to actually alleviate that gap or shortcoming. They acknowledge it, they talk to you about how they can work with you to address it and actually use the partnership as a catalyst to close that gap. That to me is a huge green flag. On the flip side, if you sense there's a little bit of digging in and too much trying to sell around it, that can often be a red flag. So I'd say the approach from a banking perspective when looking with a technology partner is how they handle and address potential gaps and shortcomings from what you're looking for can either be an initial red flag or green flag in the conversation.
Rebecca Schultz (02:53):
Great. Hi everyone. I'm Rebecca Schultz. I'm the Chief Marketing Officer for Boost Payment Solutions Boost is a late stage FinTech. We've spent the last 16 years helping optimize the use and acceptance of commercial cards for large enterprise B2B spend. I think for me, I'm going to pull the through line from the last panel about the importance of radical transparency. I think defining the relationship is really going to indicate a green flag or a red flag between the two parties. So is the relationship between the bank and the FinTech one of a partnership or is it one of a vendor? And that's not good or bad on either side, both our important relationships, but if one party thinks it's a partnership and the other thinks it's more of a vendor relationship, there's an immediate disconnect there. So a green flag as you guys have that conversation upfront to find the relationship aligned in terms of how you're moving forward together. So then your pricing, your capacity, everything that follows from that is laid on that same expectation. Red flag is you don't have those conversations and you go in with one party expecting it to be different than it is for the other one.
Erin Crawford (04:06):
Hi everybody. My name's Erin Crawford I am the Head of the Consumer Payments and Money Management teams at the Third Bank. We're headquartered in Cincinnati, but I live in the cold state of Michigan at the moment, so happy to be in San Francisco with you all. I will say the green flag in some of these successful partnerships is, and I think if you all went to the ServiceNow Visa fifth third demo earlier, one of my colleagues talked about having demos and availability right up front saying that they had a product that was shown that immediately solved about 80% of their problems. So I think having demos and also having data to support how the product is run and supported upfront and having that transparency on the success is very important. On the flip side, if you don't have that, then I think a red flag is how you consider pricing the product because if you are taking the step or the risk to be innovative with a FinTech partner and they don't have a lot of data on how it's going to perform and they're expecting you to provide some of that, then I think in turn from a traditional FI standpoint, you're expecting a test and learn period or a discount of some sort to be able to say, we're putting a lot of faith in this product, but you don't have a good pricing model.
(05:26):
One of the benefits they would get from a financial institution is how we could set them up to successfully price the product in the future. So I think coming at it too advantageously without some sort of data and backing is maybe one of the red flags I look for.
R.J. Ancona (05:41):
Great. I'm R.J. Ancona. I lead our B2B group on the supplier side, the merchant side at American Express, and we've recently actually done a partnership with Boost, so happy to be here. Fun fact, I think Ian and I are also from Michigan.
Ian P. Moloney (06:00):
We are. That's true.
R.J. Ancona (06:01):
Good Midwest representation.
Rebecca Schultz (06:03):
I'll represent Indiana if that makes sense.
R.J. Ancona (06:07):
I am based in New York City. I would say green flag for me is a joint focus on the customer need. So one of the things that I really appreciate in partnerships is when you're both talking about how to meet the ongoing needs of the customer. So it's not about each of your respective organizations, it's actually about the mutual customer need that you're trying to meet and the value that you're trying to provide. I always love when those conversations lead to innovation, pivoting in the partnership joint approaches to things. So I think that's really key on the red flag front, I'm going to the transparency, radical transparency, but I also just think communication and a little bit of vulnerability in the partnership is something that's important. So when a partner makes a pretty big decision and doesn't appropriately communicate or doesn't, if it's about your mutual customers in the business that you're serving, when they don't sit down with you and have those open and honest communications, obviously you can't do that all the time, but I really think a red flag is when there's not that open communication there, it usually results in misalignment or something being missed in terms of what you're trying to do together.
Ian P. Moloney (07:34):
Awesome. So I think I'm starting to hear a couple of trends or maybe some ideas coming out of the initial conversation around just like having a good relationship with a significant other. You want some transparency and some clarity and some aligned views across the board and that makes good sense. I think for good transparency's sake, anybody who has a question in the audience at any point at any time, feel free to raise your hand and we'll do the best to answer 'em. I'll be monitoring and looking around trying to make sure that folks get their hands raised and questions answered. But I think focusing, building on that green flag side, ultimately a lot of the banks, a lot of the fintechs, they want these partnerships to be successful. And over the last several years we've seen a lot of that success happen. Yes, there's been challenges and everything like that, but I think ultimately this substantial growth has really been kind of to the benefit of all actors and to the consumers most definitely. And so it would be interesting, I think for me to understand really from your perspectives, what are the core reasons why bank FinTech partnerships have proved so successful in operating within the financial services industry? So for this, I'll start with RJ and just we'll go reverse order back down the line.
R.J. Ancona (09:04):
Okay, great. I think from my perspective, it's also about the need of the customer that you're focusing on. In a lot of cases, banks obviously are big, they specialize in a lot of great services and one of the things fintechs do well, and I think it was brought up in previous panels was that obviously they're able to quickly adapt to emerging needs and emerging value solutions in a way that oftentimes compliment a lot of the services banks have. And so I think there's an important complimentary component there to a partnership where perhaps there's a service, a process, a technology that surrounds the infrastructure of the bank that can be super helpful to the customer. And oftentimes, at least for us when we talk to suppliers, when we talk to merchants, particularly around things like automation, we have an industry approach to how we manage our suppliers at American Express.
(10:16):
And there's a lot of specialty in those industries that comes along with automation. It comes along with software, it comes along with the FinTech infrastructure around payments in general. And so for us, I think it's really been useful to partner in a way that meets those emerging needs with various FinTech partners that are able to quickly adapt to that. I think from a vice versa perspective, a bigger company like a bank like American Express, we can obviously bring a core set of payment functionality and surrounding bank infrastructure to compliment the FinTech services. So I think from my perspective, finding that sweet spot of where there's a mutual benefit of both distribution and meeting the customer need and also the ability, I think it was brought up in a previous panel, to be able to adapt quicker than oftentimes big banks can is really, really important.
Erin Crawford (11:20):
Yeah, I think adaptability obviously is one of them. Innovation is another. I think we have smart people at large institutions who want to innovate, who want to be fast, but I think they said this in the previous panel, some of these fintechs are thinking about these niche problems all day every day. And although we have problem solvers and big thinkers within our larger organizations, partnering with someone who does spend a lot of time thinking about some of those niche problems is instrumental in fast tracking some of the problems that we're trying to solve. So I think one of the successful ways that we partner with fintechs and try and be innovative and forward thinking at fifth Third is making sure their values align with ours, but also we're trying to solve some of, I would say these are trying times from a financial standpoint for most Americans where some of the panels earlier today were even the Daily Pay was talking about 62% of customers I think previously before using their product, were missing one bill a month every month within a 12 month period. And those are huge numbers. And so we bring the volume of customers to the FinTech relationship and the trust that they have with us to manage their money and then the products we offer ultimately and how we bring those to life, the FinTech brings to us to make that partnership successful to help solve some of those real world big problems because there is so much sensitivity around how your money is managed and safe.
Rebecca Schultz (12:56):
Yeah, absolutely. I think the complimentary nature of the relationship is really what's critical to the success of it. Banks get to be sort of the jack of all trades. They have everything. They're that one stop shop, but often the benefit that the FinTech can offer is being hyper specialized and focused on one core skillset. So whereas the bank partners that we have are thinking about every product that they have and the full financial need of a customer at Boost, we are focused on exactly what they need for B2B, and that means we're able to invest our time and energy and technology into the specific need to B2B and create purpose-built solutions for that that compliment the bank partners broader product set. So for example, a couple months ago we did a $66 million transaction on card single payment. The core merchant processing solutions at most banks aren't set up for that.
(13:56):
Consumer rails are not set up for that. So being able to move those kinds of funds in the way that we do on the rails is something that we can add doing it in an automated way and having the true straight through processing. We've invested the time and energy and dollars into doing that and coming up with that solution, and now we're able to partner with organizations like Amex to make that available to their customers. And it's complimentary to the broader solution set that American Express already has with those customers. And now win-win, getting more money on the rails altogether because it's not a matter of cannibalizing what each other were doing. It's a matter of now more money is going to be on card that previously couldn't be because addressing the key pain points that might have gotten in the way of deepening those relationships.
Christian Santaniello (14:46):
So I'll hone in on I think a topic that all three of the panelists have just talked about that I really agree with. It's really around the idea of specialization. So I think a lot of banks and financial providers have very niche industries that they target and they have bankers that are experts in those industries and servicing folks that are experts in those industries. They all use a certain lingo and yet banks I think often struggle and then trying to take their standard banking services and putting those forth in a manner that follows that specialized lingo or specialization. You take something very simple and basic like ACH debit origination, one market segment might view that or call that as dues collection. Another might call it debt collection, another might call it a vendor payment. And so that's really, I think just another example of where fintechs have really excelled in providing hyper industry specific specialized solution that really augments, say a banker that lives and breathes that industry, but maybe their banking offering is a little more vanilla. And so being able to use the bank's underlying payment rails and depository rails and credit rails and augment that with a very hyper specialized user experience, and that I think has been a key driver for a lot of the success that we've seen.
Ian P. Moloney (16:02):
That's great. And it seems like there's really that focus on hyper specialization, but really having it be a core competency, having some flexibility and being able to ensure that a bank that might be more of a traditional financial institution have not pursued partnerships can really acquire customers and reach more people more effectively because consumer demand is always going faster and faster. But we do have a question in the audience to the man with the atomic hat.
Erin Crawford (16:38):
Do you work at Atomic? I'm kidding.
Ian P. Moloney (16:40):
Were you on the previous panel?
Audience Member 1 (16:42):
I'm just going to speak up.
Ian P. Moloney (16:43):
Oh, there we go. There you go.
Audience Member 1 (16:45):
So too loud on the mic. My question is, if you think back at the best partnerships you've ever been involved in, what kind of enterprise value did it unlock for you? Because I think it helpful to think about what sort of scale these opportunities have. Do you get most scale from your internal projects or do you get more scale from some of these FinTech partnerships? Does that question make sense?
Ian P. Moloney (17:05):
Yes. I'm so happy I planted you in the audience to ask that. So thank you. So anybody feel free to take it.
R.J. Ancona (17:12):
I'll actually jump in and answer it a little bit differently. It's actually, for me, the most enterprise value has been removing accidental friction with your own services that comes from something that's unique to either the customer's ecosystem or an emerging need as a result of the payment ecosystem. And so I think about virtual card processing as a good example of where virtual card processing is growing. It's an area that is getting a lot of investment. Customers are adopting our tools around AP automation in general. And one of the exciting things is we're starting now more and more to think about how we solve the supplier pain points associated with that. We're facilitating the transaction. It's a big enterprise value for us to obviously process those transactions because in our case, we have the buyers and the suppliers and making sure those transactions are being supported and going through. But ultimately when we think about our partnership on Boost Intercept, we want to make sure that that's not creating another pain point for the customer then when they receive that payment. So I think that there's definitely enterprise value when you just think about joint growth together. But I also, some of our best partnerships have been when you're actually removing friction or creating incremental value at the end of your service, that makes it really more holistic and easier for the customer to then adopt.
Ian P. Moloney (18:54):
Awesome. Anybody else want to take a shot or,
Erin Crawford (18:57):
Yeah, I think I can add to that. I think it might not be one thing that provides that enterprise value, but I do think having the right relationship and that transparency that we've talked about early on really excels the exponential growth on different opportunities that FinTech and you may have identified. And so it might not be that you're solving for one thing at scale, you're solving for multiple things, but you now have a trusted partner that can help you solve for that and help you identify what that roadmap could look like. So I think that's the extra benefit to me. It might not be one big bang enterprise solve.
Ian P. Moloney (19:38):
No, that's awesome. Thank you for the question. It's a very important thing to think about the consumers always, and that's been clear from a lot of our members, but also thinking about what processes are you pursuing, how are you engaging? And so I'd be remiss if I didn't kind of dig in a little bit deeper and think about each individual's expertise on the stage. I'll start with you Christian. When you're thinking about things like ongoing monitoring and shared responsibility between partnerships, how important are those factors and what do you think about when you you're trying to make a successful partnership?
Christian Santaniello (20:19):
So I'd say more important than ever, I'd say over the past six to 12 to 18 months, there's even been a heightened scrutiny on this topic. And so I think breaking it into a few buckets, there's the importance of outlining and agreeing upon what the monitoring will be at the onset and putting as much of that on paper and into a contract as possible. But even more important, and speaking from the banking side is you can have a very strong contractual arrangement with a FinTech partner or a vendor where they have agreed to do a whole bunch of things and agreed to do so very well. But we all know ultimately if something doesn't happen, it's still on us. So establishing the monitoring and additional management controls on the banking side to ensure that your partner in whatever form of partnership it is, whether it's a partnership or a vendor relationship, I think that there's heightened scrutiny on that in many cases. There might be a little bit of, I'd say regulatory ambiguity on what exactly the responsibilities are and how they should be spelled out. But what is I think pretty certain is whatever you agree upon, you need to make sure it gets done. I think we've had to evolve and make sure as an industry that if you agree to something, even if your partner has agreed to do it, that you are proactively in an ongoing manner monitoring and making sure that that's actually happening. Because if it's not, you're on the hook.
Ian P. Moloney (21:46):
And that's something we hear all too often. We represent 40 different banks and the regulatory structure is such that the banks are on the hook now, fintechs of course, have that shared responsibility. It's important to be in that partnership, but from just the facts and circumstances of the regulatory structure, banks hold a lot of liability. So I think that's important. And taking a total left hand turn a little bit, but keying in on the audience question, Erin, I think you touched on it a lot about filling the gap and thinking about the consumer, but I just wanted to see if there's anything more that you wanted to say about the importance of doing that and sort of making sure that you're filling a gap is effectively within the market by a bank FinTech partnership.
Erin Crawford (22:36):
So I think obviously success measures on that gap are incredibly important in identifying those upfront. But I also think how did you get to identifying that gap, right? Was it your competitors are already offering this and there's benchmarking that says that you're behind? Or the flip side might be you've identified a gap yourselves and you're trying to innovate and move quickly to be first to market. And so I do think that having those success measures in place upfront to say what needs to be true to have this measurable gap be successful not only on the relationship side, I think between the FIS and fintechs, they should have success measures on what needs to be true for this relationship to be successful, but what needs to be true for this launch and go to market to be successful. And then ultimately, how are we going to launch and love this product and the success of that and have we planned for any blips along the way and how are we going to be successful together to manage some of that discourse, I think is how you sort of try and manage the gap. But that was sort of a broad answer on many ways you could manage lots of gaps in that context.
Ian P. Moloney (23:47):
I mean that's still good though because it can cut across and you can apply it to multiple different scenarios. And so one particular scenario that I think we have the benefit of since we've got Rebecca and we've got RJ two sides of a partnership going on in real time. First off with RJ thinking about the testing and the learning and that phase of the partnership with Boost, can you walk me through what was that, how did that go and what made it successful? Because clearly it has been successful.
R.J. Ancona (24:19):
Yeah, what's interesting is we've been talking to Boost about a potential partnership for a couple of years now, and I think that there's a theme there, which is that I think it could take multiple iterations to really find your sweet spot. And so there was a willingness to do a little bit of testing and learning around value creation and customer pain points that we were looking to solve for through a partnership. I think there was also being transparent, there was some relationships between our leaders, our leadership, which I think really helps because it gives you a little bit of a sense of joint purpose and I think permission to co-create together a little bit more.
(25:11):
And I think ultimately where we found our sweet spot and the current partnership, it was so easy. I think Rebecca can probably, we found it because when we solved for the joint value creation with the customers, it just started to move very quickly. And so I think certainly we went through the right onboarding processes and risk reviews and Boost was a hundred percent at the table. What do we need to do? What do you need to do? But then ultimately when we got into some piloting phases with customers, it was super easy. And I go back to a little bit what Erin said, which is we started to then talk about what would it look like for us to get to this or to get to that or for us to solve this gap in this way. And it's sort of been a little bit of a rallying cry for the teams to be able to get there because it's meaningful I think for both sides.
(26:13):
And so that's the other thing I would say is a lot of what we learned is pick something that's going to be really meaningful for both organizations because it's really important to your joint customers and to each of your businesses naturally. Then the team started to kind of flow towards that because everybody's sort of incentivized in the same way to be able to rally toward that. And I think ultimately we've iterated too, we've learned things. We have a very open communication where there's some bumps that you're going to encounter or things that you need to say, okay, we need to adapt this way, or this customer has something special that we didn't anticipate. What do we need to do to break through that? And I think we've done that well.
Rebecca Schultz (27:03):
Yeah, absolutely. I think just to follow on that, I think knowing that we both win together, the way that AmEx sees success in this relationship is the same way Boost does. So our objectives are 100% aligned. There's no conflict of, well, I really care more about A and you care more about B. We are on the exact same path in terms of what we're delivering to customers and how we see financial gain out of it and benefit from it. So that makes it a lot easier. I think also it's sometimes easy in these partnerships to fall into the idea of MVP and it's a pilot, so we're going to try not to put too much into it until we know if it succeeds or not. And I get it, but at the same time, I think where we've seen the most success in our partnerships and Amex is a good example, is when we say we are really going to give it our all at this.
(28:00):
It's not a matter of what we're going to train two salespeople out of 200 and see if they can make it work. And then if it doesn't, you still have that open question of, well, was it the solution that wasn't right or did we not go to market the right way? Did we really try our best so we knew it was success? Green Flags when our partners are coming to us and saying, okay, to start with, you're going to speak to all 250 of our salespeople and introduce them to your product and service, and then here's going to be our weekly partnership meetings and here's our KPI dashboard and here's our top level reports that we're doing. That gives us the confidence going into it to say, this is where we're going to put time, energy, investment because they're at the table with us. And if it doesn't work, we all know we tried and we all know we can leave that behind and move on to what the next best thing is, but the chances of it working are so much stronger.
Ian P. Moloney (28:57):
So Erin just kind of digging in a little bit, and obviously it seems like AMEX and Boost would make great contestants on the newlyweds game. Y'all are completely aligned, so that's awesome.
Erin Crawford (29:06):
I was going to say, should I move? Should I, should I sit?
Ian P. Moloney (29:09):
It's all right. We'll keep our seating order for now.
R.J. Ancona (29:11):
We're going to turn us to each other's back and see what we said about each other.
Ian P. Moloney (29:14):
Yeah, y'all both like white rice and chicken. It's a fantastic story.
Rebecca Schultz (29:18):
But who doesn't love a good KPI dashboard?
Ian P. Moloney (29:20):
Oh My God. Right?
Rebecca Schultz (29:21):
That's my love language.
(29:22):
That's right.
Ian P. Moloney (29:23):
Well that's fantastic. Thinking about those love languages, you've got the benefit of in this space, you have a number of different folks that you work with. Some may be large like AmEx, some may be smaller. So when you're engaging with those partnerships, how do you ensure that all your partners feel like they're being treated equally? And I won't go down the love language route any further because it's going to get us in some trouble, so I don't want to do that. But thinking about the cultural fit, what role does that play in the whole mix?
Erin Crawford (30:00):
You didn't say my name, but did you want to,
Ian P. Moloney (30:02):
My goodness, my apologies. I met Erin, Rebecca. Wow, Rebecca. Rebecca, happy. I was staring at you and yes, since Rebecca,
Rebecca Schultz (30:11):
I think it is that culture fit. And we heard on the last panel, it's not necessarily something you can perfectly define, but that open communication from the very beginning of what does success look like for each party, what the expectations are from each party. I think that's really what sets it up for if you are going to feel valued in it, at the end of the day, if one side or the other is putting a whole bunch of time and energy into it and they're not getting reciprocal feedback or input or investment on the other side, then it creates an unbalance. Then you're automatically in a situation where one side feels on the defensive or unappreciated, and even if it's financially a success or there's business success, it doesn't always feel that way because you don't feel like you necessarily got there together. So I think it comes all back to that really clear, transparent communication from the very beginning.
Ian P. Moloney (31:11):
Okay. Yeah, that makes total sense. And all the questions around who's going to sit where, just mess me up on the names.
Erin Crawford (31:19):
Could I add to that though? Because I do think that we've talked about what's important for things to go well, but there are instances where it doesn't go well and some of those upfront communications where you're starting to feel almost like the icks like this isn't going where I want it to be going. We can pilot this, but also you're starting to see some red flags literally. I think it's important to note that you are not literally married to that relationship and to that partner for that problem to solve. And you have to be okay to know where to draw that line and say, this actually isn't going to work out and have those hard conversations too. So on the flip side, I think it's, yes, we want to innovate, we want to go forward and do these cool things together. And most of the time they work really well and you get that customer benefit and a new relationship with a FinTech partner. But there have been times where they don't go well and that's okay too. And it might just be if you've built the right relationship that it didn't go well for that thing, but it's not closing the door. And I think that's some of the learnings we've had is we've piloted a couple things that we felt like we're maybe too boxed in for what we were looking for and we've pivoted, but we still have a big relationship with that FinTech. And so I think that's also important to note.
R.J. Ancona (32:37):
It's actually a very good point because that's exactly what happened when some of the previous iterations boost where there was a particular situation where we just said, you know what? This isn't going to work. It's not creating value. It's actually could be creating more friction for the customer. But we stayed in touch and we continued to keep the lines of communication open. And that's where I think because you never know where the customer needs are evolving all the time, but also I think the advancement of technology and things that were happening in both companies, it's ultimately how we did find the sweet spot. So our fabulous honeymoon relationship didn't always start that way, but you have to be willing to make those tough trade-offs and say, you know what? Let's pause. This isn't working, let's revisit something else. Or what else might be on the table for future partnership and members?
Christian Santaniello (33:34):
And I'll add to that too. I mean if you know that you feel it's one that ultimately shouldn't move forward, making that decision when you know that versus dragging it out a little bit further, ultimately if you make it at the right point when you realize it can keep the door open more effectively, because if things continue to drag out and maybe have bias about trying to keep it moving forward to keep the initial decision as is, then things can maybe spiral out of control and maybe limit the ability for future partnerships. So I totally agree. There are opportunities where you need to make a change, and as long as you're honest about that and do it at the right time, the door can always be open.
Ian P. Moloney (34:08):
Well, it sounds like again, that sort of transparency, that clarity of understanding everybody rowing in the same direction makes a lot of sense and that there's always that flexibility leaving the door open, which technology changes every two seconds it seems. So there's probably a benefit to that. I did see an audience question in the back, so a little bit, but I think she's running over with the mic and a jogging, running jogging. Sorry, as long as it wasn't as saunter.
Audience Member 2 (34:43):
So we've been looking at this I think from the point of view of solving for a gap or an insight that specialized fintechs are bringing ideas to the bank and asking how can you help me deliver set experience? My question for the panel is, what insights and or value have you positioned to the FinTech to differentiate yourselves as partners?
Ian P. Moloney (35:13):
I think we should probably start with one of the banks potentially.
Christian Santaniello (35:17):
Sure. So that's a very good question. I can give you my perspective as someone who represents a digital bank and if for providers we work with, I mean what we can put forth is the opportunity to have a logo on their side that if they're a provider of some sort of digital payments or really anything that can be correlated to digital and they can include the ability to talk about partnering with a digital bank, then that can ultimately allow them to increase their marketing and provide more opportunities for them. So I think we always want to be able to put forth as much interest in what we can bring to the relationship as what we can get out of the relationship. So ideally, if we're doing that well, they see that how either the name of your financial institution, the growth that you can bring them beyond just the revenue of the specific relationship can actually provide additional opportunities down the road. So I think one area I'd put forth.
Erin Crawford (36:17):
Yeah, I'm going to jokingly say our big juicy customer base. We have two and a half million digitally active customers. We do billions of authentications and logins into those digital channels every year, every month. And so that is one thing, but I also think when they're looking at partners, there has to be a common alignment to what the bank offers. And so they might not want to do business with financial institution because of something completely different, but I do think a fifth third relationship banking is sort of at the forefront of what we do. Building those customer relationships regardless of what channel you come to us through, that's branch or digital or whatever. And so we want to make sure that the servicing aspect of that and how that product can be serviced. So if you let's say do something in the digital channel and there's an issue with it and you call us or you message us that we have a way to support that product. And I think from a FinTech standpoint, not only the large customer base and the strength we have with the relationship we have with our customers, we have the levers to be able to service that product offering through multiple channels and do it in a way that helps the customer. And so that would be one benefit that I would think from a FinTech relationship, looking at the opposite side, what we would offer to them is just the backing of the amount of support we can handle sort of at scale on those customer offerings.
Christian Santaniello (37:50):
And I'll add one more thing that I should have mentioned. My first go around is, I mean all companies need banking in some way, shape, or form. So you may be approaching it out of the gate as a partner or vendor relationship, but that FinTech might need a loan, might need a specialized depository product, the owner might need a mortgage. And so that's another way that by partnering with a financial institution, if we're doing a good job and approaching it as a holistic relationship, we'll actually ask them what other ways do you need help beyond this specific partnership? Going back to the comments, but overall relationship banking, we may approach them for a certain need, but then if we're doing our job well, we're actually saying what can we do beyond this to help you? And ideally we identify a need for them from a traditional financial services perspective to actually offer something else to the overall relationship.
Ian P. Moloney (38:38):
Awesome. Alright, we're good on the audience question one more, yeah, sure. Absolutely. Sorry, that one's going to be a run that, yeah, that's going to happen.
R.J. Ancona (38:52):
Got to work for the wine, the happy hour.
Audience Member 3 (38:56):
Quick question. So I want to follow up from her question around the bank's perspective on the partnerships. And I want to ask Rebecca a question in terms of your FinTech perspective, especially in marketing too, where if there are banks considering a partnership, I'm sure a lot of your day-to-day is focusing on that messaging to really promote the benefits of those partnerships versus banks maybe building an in-house solution or buying a solution. I'm curious, what do you think are the biggest misconceptions that you hear or that you see that banks may have about fintechs? What do you feel like you're kind of having to counter in your marketing messaging or just in your day-to-day conversations? I'm sure you get quite a bit, I'm just curious to know what those are.
Rebecca Schultz (39:49):
Yeah, I think it's been hit on a couple panels today, but the risk factor, there's still a reputation out there that fintechs are inherently risky. They're unregulated, they don't have the same level of control and due diligence that a bank has. And I had say, from my perspective, it's simply just not the case because you can't operate in this industry with that sort of attitude. You may come out of the gate and be learning along the way. And I think in the past there certainly was more of that if we look at 10, 15 years ago. But nowadays, if you're going to be successful in payments and PayTech in particular, the expectation is there that you have your ducks in order and you know how to comply with all the regulations that you assume that you are going to be treated as part of their third party supplier management system.
(40:46):
If you're processing card data, you have the same PCI compliance requirements that the bank does get your SOC two ready, you're going to need it. You've got to have all of these pieces in order. And so I think that's become a lot more par for the course. So I'd love to see going in with an assumption, always trust but verify we're on the same due diligence you would, but don't assume just because it's a FinTech that they aren't going to have those controls in place. I think the other piece is that sometimes there's an assumption that anytime you're working with a FinTech, it's going to be a big implementation project that you have to do. That is something you need to plan 6 to 18 months out for, and you've already allocated your IT budget for the year and all that, not necessarily the case in some cases that may be, but that's very much old school core banking type of mentality.
(41:41):
A lot of the fintechs nowadays, the strength that they bring is flexibility, whether that's through APIs or SDKs or their coding to you or it's something that doesn't actually require a technical integration whatsoever. So in those initial conversations, ask those questions and really get a feel for what that level of effort looks like and what that cost and timeline looks like. It might surprise you, it might not be nearly as big as you're going in with the assumption based on projects you've done even maybe two or three years ago. That's how quickly it's all advancing. And also from the marketing perspective, I do have to second what I heard over here. Please say yes to the press release for your partner, for your FinTech partner, say yes to putting your logo on their website. Say yes to doing the case study if you can. Those things truly do add value for your FinTech partners out there, and it's one of those ways that you get to that right balance of value on both sides.
Ian P. Moloney (42:41):
So I really enjoy that We're getting some good audience questions, so please feel free to continue that trend. Given that we're 10 minutes away from happy hour, we all need to find some more reasons to drink, right? Or some puzzles to solve whatever the case may be. And so with that, we've been talking about how to make these bank FinTech partnerships successful, but let's talk about the challenges. And so I know it's not the most comfortable way to end the conversation, but we had to go positive or negative first or second. So either way, we're going to end up here. I'll just push this to everyone recognizing that some of these banks and tech partnerships really don't get off the ground. And we talked about the need for flexibility in keeping the door open, but really what in your opinions lead to the biggest challenges? Is it cultural clashes? Is it power dynamics, partnership, economics, all the above or something completely different? So I'll start with Christian.
Christian Santaniello (43:44):
Sure. So something we've been seeing more of in recent years is instances where let's say we actually have a successful partnership that we're pursuing with multiple partners. It's actually having those partners where they need to work together. So I think it's always been the case from a banking perspective. We have different partners, vendors and providers that need to work together. But I think what's happening more and more now with so many new providers coming to market, and sometimes with overlapping capabilities, we see one provider or one partner that has a great fit for us and another does a great fit maybe as a small overlap, but we actually need them to work together to fit into the puzzle for us. And there may be very good reasons why we need to use both instead of just one. And so I think that's something we're seeing a lot of, even more so in the last one to two years than before that where we're introducing providers together that have never met or worked together in some cases, it goes really well. They're excited, they see opportunity to actually partner and go to market to other banks together. In other cases, it doesn't go very well because they see themselves as competitors and they don't really want to engage in an active partnership. So that can create challenges for the bank that's trying to work with both of them.
Rebecca Schultz (44:56):
Yeah, I think the idea of the culture piece is probably the biggest one, but an element that we maybe haven't nuanced to it that we haven't touched on is how much do you as the bank who's using the service want to own and present that service as your own, right? There's a whole spectrum of how you can do these partnerships from everything from a full integrated white label solution all the way down to a fully transparent referral type relationship. And there's pluses and minuses to all of those and your speed to market, your financials, your process, all of that may change depending on what you pick. And so I think sometimes for these big brands, these big banks, and I did my tenure at some of the biggest before ending up, and on the FinTech side, there is this gut reaction of like, well, it needs to be exactly the way that we do it and it needs to look and feel like us. And I appreciate that as a brand steward, but it's not the most effective way always to go into piloting and trying something out and seeing if it's successful. So I think one of the potential challenges is where there is an expectation that the FinTech needs to customize everything to what you're looking for to do just in order to pilot it. And that just might not be feasible or a good use of your own time and investment either.
Erin Crawford (46:31):
I'm going to say the complete opposite, but on the same lines, it's good. We want to keep it spicy, right? This is fun. Yeah. In one instance, we did pilot to employees with a FinTech on subscription services, and it was very out of the box everything. We needed cancellations, and some of the things we really wanted were further down on the roadmap, but identifying that recurring spend and bringing the visualizations to the customer. But it was in sort of a box, and I manage digital channels, I'm in control of the experience and I have money movement capabilities over here and subscription services in a totally different module over here. And so one of the friction points was trying to say, we do want to control this experience and just embed the APIs into our solutions and here's our roadmap and vision for what we're doing for that.
(47:28):
And it just wasn't available at the time with that FinTech partner. And even though they were working to try and figure out how they might be able to bring that to life, there were different APIs with different providers that they were using that they just couldn't offer us experience. And so we sunset that pilot to our employees. We immediately, when we did the pilot, saw an initial spike in engagement for that product and then sort of a drop off in usage and no reengagement, which led us to say, we really need to own this experience. It's sort of an isolated thing over here. We do other business with that partnership. And that was one of the things that just didn't go as we expected it to. But I do think it's either or, right? So it's like they might not be able to offer that to you. And if that's what you want to do, then that's just not the right path for you. And both are okay. But,
Rebecca Schultz (48:23):
I think that's the challenge, right?
Erin Crawford (48:24):
That's the challenge.
Rebecca Schultz (48:25):
Expectations and needs of the two sides, but not lie,
Erin Crawford (48:27):
Depends on you're sitting in. But yes,
R.J. Ancona (48:32):
I agree with a lot of what was said. I'll comment on the distribution. And I think Rebecca, you hit on it before around having the resources dedicated. I think it's whether it's in a digital channel or in a field-based channel, it's having that one or two really good wins where you're like, ha, there's something there that was a sweet spot. When you don't have that rallying around something that felt right, and it doesn't have to be huge, but it has to be okay, we're onto something to motivate the teams to keep going and discover that next thing. Because I think all too often we either wait too long to say actually that thing's not there, and so we need to do some more work or pivot or that thing is there, let's go try and find another one and keep the teams motivated. And I think when you don't have that or when you're not convicted around it jointly, it becomes really hard to motivate the teams to work together. So I think that that distribution motivation is key.
Ian P. Moloney (49:45):
That's great. So as a naturally optimistic person, I couldn't end on a low note or a challenge, so I have to say at least give halfway, just quickly 30 seconds each. If there's ways to improve or support these partnerships and keeping the financial industry resilient, secure, what do you see as sort of the key takeaways that the audience should be thinking about on that front? So I'll start with RJ.
R.J. Ancona (50:18):
I think for me, communication and rallying around the common objectives that are meaningful to you both, it always keeps your north star, it makes up all of the risk processes, the customer challenges, the pivoting in front of you. And I think if you don't have that clearly and it's not meaningful to both organizations and you don't communicate often about it, it becomes really hard to decide whether or not there's there to keep going.
Erin Crawford (50:45):
Awesome. Erin? I would say, where are we going next? If we have a good relationship, we've launched something successfully, help me build my roadmap, help me prove my business cases, bring me data that shows me that there's value here and either customer value or business value, and let's go sell that together. Help me take something to finance to get it approved because there's a return here for our customers and a return here for our investors. I think my big question would be where are we going and how are we going there together to keep it going?
Rebecca Schultz (51:18):
Yeah, I think going back to something we said earlier in the session around being very self-aware on both sides of what your gaps are and what your strengths are and why you guys are partnering with each other and how you compliment each other ensures that you kind of keep in mind why that relationship is there in the first place and also helps identify other opportunities to potentially work together down the road. So really just keeping that core in mind of, oh, here's what you do really well. Here's what I do really well, here's why the power of us together is even better.
Christian Santaniello (51:52):
And I think I'll touch on a topic Rebecca mentioned earlier on the area of risk where I totally agree with what you said, that I think from the banking perspective, we need to make sure we're looking at risk holistically. I think banks traditionally tend to look at risk in silos, and in this case it could be a FinTech partnership being looked at through vendor risk management. That needs to happen, that should happen. But if you take a step back, it's also important to look at what are the risks of not doing this partnership and how that might augment the risk to your KRI at your business unit level, your growth objectives, your revenue objectives, your efficiency objectives. So focus on not just the risk of doing something, but also the risk of not doing it.
Ian P. Moloney (52:35):
Yeah. Alright. Awesome. Well, on that note, I know to the best of my knowledge, all of these folks will be at the happy hour. You can come find them there and I know I'll be there. And so you can come find me and we will get played off by the Oscar music and thanks everybody for hanging out. Appreciate it. Thank you.