NEW YORK CITY — Lenders are increasingly partnering with fintechs to update their legacy systems, but fostering successful partnerships requires strong collaboration at all levels of the organization.
“For more banks to do this well, they need to understand technology. And they need to understand startups and the nature of their business, as well,” Piermont Bank’s Head of Innovation Rodrigo Suarez said Wednesday during FinovateFall in New York City.
“It’s not natural for most bankers to do that, and it’s also not natural for most technology folks to understand how banks think,” Suarez said. “So being able to bridge that gap and have people on both sides that understand both sides of that equation is very important.”
Suarez outlined three steps for fostering successful fintech partnerships:
- Collaboration on both sides
Successful fintech partnerships are marked by strong collaboration from both banks and their fintech providers, Suarez said.
“There needs to be strong engagement [and support] from everyone at all levels, from senior leaders to folks actually operationalizing those partnerships,” he said. “Without that very strong collaboration, partnerships don’t really work between banks and fintechs.”
- Understanding regulatory requirements
Ensuring that both parties understand the regulatory obligations of both financial institutions and technology providers is paramount to long-term success, Suarez said.
“In many cases, that [means] the bank is working with the fintech to make sure that certain things are in place and done in the right way,” he said, noting that it’s important that fintechs have a “real understanding” of banks’ regulatory obligations.
- Transparency, culture are key
Transparency between banks and fintech providers is vital to advancing the partnership, Suarez said. Without transparency, it is difficult for both teams to work toward the same, shared objective, he added.
“I think the broader takeaway for me [in the last three years] is the importance of … having the right culture as a bank to be able to do this sort of stuff well,” Suarez said. “I think that is sometimes not emphasized enough, and [culture] alone gets you a long way.”
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