Banks, Credit Unions, and other financial institutions stand to massively benefit from integrating with technology partners that allow them to better serve their customers. With massive advancements that have been made in the Fintech space, it would make little sense for banks to forgo relationships with those Fintechs that can enable them to provide excellent customer experiences. Unfortunately, many banks still view Fintechs as inherent competitors that are out to eat their lunch - which simply isn't true. Establishing these connections, especially under the bank’s own umbrella brand, benefits banks in myriad ways.
Let’s dive into how banks stand to benefit from integrating with Fintech enabling partners. To start, Fintechs have been able to develop features and infrastructure that iron out traditional complications that are associated with traditional banking processes and products. They allow for automation, self service, and data reporting. When a bank seeks to streamline its own operations by bringing such fintech products under their own brand, they are able to provide their customers an ease of use that they otherwise would not be able to provide.
More than that, connecting with a Fintech Enabler allows that bank to access a history of stored data, including how to troubleshoot customer issues, how to deal with particular technology products (particularly in the case of payment processing), and how to address and prevent issue escalations. Chances are that a given customer interaction has happened in some time or place before - why not put your bank in a position to take advantage of that knowledge? Why look to build out these processes internally? There’s no use in committing time, energy, and capital to building these solutions from scratch.
There’s a term for how banks can benefit from these partnerships: Network Effects. The underlying principle of network effects is simple to grasp: they refer to the concept of the value of a product or service increasing when the number of people who use that product or service increases (as evidenced in the preceding paragraph).
Having reliable systems integrated into your processes attracts more customers, increasing adoption rates of your products and services. These in turn drive greater customer satisfaction and revenue growth. The more customers you acquire, the more efficient you can become, and the more profitable your bank will be. In the coming blog posts, we will highlight how specific network effects drive further adoption of a bank’s services, and how Fintech Enablers are the best avenues for getting there.