Kevin Tweddle: How to pick a winning fintech partner

By Kevin Tweddle, ICBA

Partnerships between fintechs and banks are accelerating, which is positive news for community banks. Strategic fintech partnerships can give community banks a competitive advantage, strengthen the customer experience and, ultimately, improve the customer relationship.

Community banks have a keen sense of banking and the regulatory environment, and they have a strong customer base, which is a weakness for fintechs. On the other hand, fintechs are technologists and skilled at focused problem-solving, which is difficult for some community banks. The alignment of these strengths makes for a strong marriage between banks and fintechs. Here are the five steps of evaluating a potential partner.

  1. Ensure your strategies and missions align. Is the fintech devoted to community banking, or is this a one-off project for them? If the fintech is under the gun from investors or more interested in growing than helping your bank, look elsewhere. There’s a lot of pressure in the fintech world to grow, especially if funding comes from venture capitalists and angel investors. When it comes to successful fintech partnerships, strategy and mission alignment are nonnegotiables.
  2. Conduct an executive evaluation. This is where things can go south in a hurry. Fintech executives usually consist of a founder and chief technology officer. What background, experience and interpersonal skills do they have? Are they willing to go the extra mile and complete the regulatory and vendor management due diligence required? Also, consider whether the fintech has the long-term capability to build solutions for the community banking industry.
  3. Assess technological maturity. Technology is tricky because it’s evolving so quickly. You don’t want to work with a fintech only to learn that another fintech can offer you something faster, better and cheaper six months down the road. Make sure the company’s technology is not easily replicated. If it is, you still might decide to partner because of its long-term capabilities.
  4. Consider bank-wide integration and impact. Does the solution integrate easily with your core processing system, your mobile platform and other bank applications? Is it scalable? Consider the regulatory implications and required changes to bank systems and processes. What impact does the technology have on your customers? Do you need to send out a change disclosure? Integration across all facets of the bank is critical.
  5. Determine overall benefit. I’m not a huge believer in hard-coded ROI calculations because there are so many intangibles. But to move the needle, you must prove sufficient impact on your customer base. A written document allows you to identify the evaluation factors that go into determining organizational and customer benefits.

We’re still in the early innings of fintech and community bank partnerships, and both sides are trying to find the best path to success. If we work together, we will accomplish more than if we each try to go it alone.


Kevin Tweddle (kevin.tweddle@icba.org) is chief operating officer of the ICBA Services Network

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