Finance Monthly September 2019 Edition

49 www.finance-monthly.com FINANCIAL INNOVATION & FINTECH - FINTECH PARTNERSHIPS tasked with the creation of one of the largest AI-based credit scoring solutions in the financial services industry. Partnerships of this kind drive faster innovation and the adoption of new technologies like AI. Until a few years ago, no one would have anticipated the extent to which big industry players have invested in and become reliant on partnerships. These partnerships also present great opportunities for smaller companies looking to increase their market share. BUILDING SEAMLESS CUSTOMER EXPERIENCE Another common form of collaboration we have seen is banks choosing to set up partnerships with the aim of improving the ‘digital experience’ of their existing customers. Partnerships create a massive opportunity for businesses: enabling them to streamline internal processes, add technological capabilities, and most importantly, improve the end customer experience. Customers are increasingly turning to digital channels to manage all aspects of their life, and financial services is just one industry being revolutionised by digital. With customer expectations for a seamless service ever-increasing, providing fast, convenient digital services has become critical for banks if they want to keep customers satisfied and sustain their competitive advantage. For established banks, partnering with a FinTech or Backend as a Service (BaaS) organisation offer an accelerated path to providing the best customer experience, which can be difficult to develop in-house due to legacy systems. At IPF Digital, we have partnered with several innovative players (e.g., Kontamatik, ElectronicID) to utilise their technology capabilities in ‘know your customer’ (KYC) and online verification, to provide a seamless digital onboarding experience for our customers. AIMING FOR THE WIN-WIN For partnerships to be truly successful they must be equitable and aligned with both of the companies’ strategy and values, and they should benefit both partners in order to support the longevity of the collaboration. One of the real challenges facing any high- growth oriented company, be it a young challenger bank or a mature FinTech aiming to speed up its growth, is finding and sustaining efficient customer acquisition channels. Partnering organisations with an existing, large customer base is appealing as it provides access to hundreds of thousands of customers that can benefit immediately from the attractive FinTech offering. Meanwhile the partner provides additional value to the consumer and adds the possibility of new monetisation opportunities. An excellent example of this is the collaboration between Affirm and Walmart announced in February this year. By combining their resources and brand power with the innovative solutions created by FinTechs, banks will find they are able to serve new customer segments. An example of this type of collaboration is the partnership launched between Kabbage and ING in 2017, which allowed ING to expand its small business lending into France and Italy. Finally, partnerships can help businesses at both ends of the size spectrum to achieve efficiency, enable faster time to market, and ultimately speed up revenue generation. For established financial institutions, there are significant benefits: from fostering internal innovation to ensuring customer satisfaction and retention. The benefits for FinTech start-ups are also substantial, enabling the FinTech business to gain access to funding without giving away equity, and secure an alternative cashflow. By combining their resources and brand power with the innovative solutions created by FinTechs, banks will find they are able to serve new customer segments. “ “