More and more banks have seen fintech as the fastest way to accelerate their digital transformation processes. Long gone are the days when they saw each other as enemies. If we look at the hard statistics – overall, 65% of banks and credit unions entered at least one fintech partnership over the past three years, and 35% invested in a fintech startup.
Speaking of fintech, a few decades back we were not even talking about this “buzzword.” Instead, these companies were often referred to as something along the lines of “third-party solution providers”. If we look back even further in the history of financial technology – debit cards and credit cards were introduced in the 1950s and internet banking in the 1990s. So, this partnership has always existed. There are just different channels, different platforms, and different approaches to the customer.
We sat down with Šimon Kočí, founder of Everly.eu and Head of International Partnerships for TapiX by Dateio, who is the moderator of a panel discussion on the topic of Cooperation between banks and fintechs the upcoming CEE SME Banking Conference in Prague.
OG: Simon, tell us what is the line-up, and which particular points will you focus on in the panel discussion? What can the visitors look forward to?
SK: Thank you Olena for sitting down with me. I think our teams did a great job in bringing together top-notch industry insiders. We will hear from speakers from some of the most well-known banks as well as innovation labs, technology partners, and more in the line-up. Therefore, it is surely, or at least I hope, going to be a vibrant and insightful panel. Just see for yourself:
Getting back to the actual topic of the panel. As it often happens with panel discussions, we might cover many topics, but the focus will be on the following points:
- What drives fintech partnerships?
- What does the process of procurement and scouting look like?
- Launch of innovation ventures in banking groups – is it effective? How was innovation embraced before the launch of these partnerships?
- Which cooperation models are best suited for frictionless innovation?
These are the topics that resonate with both fintechs and banks. I am really excited about the panelists, and I am looking forward to learning what these industry insiders think about it as well.
OG: What, in your point of view, could accelerate the process of cooperation between banks and fintechs?
SK: There is huge bureaucracy behind partnerships and procurement, therefore providing a seamless administrative agenda experience is a must-do in this digital era. But even things like an easy-to-understand developers’ portal, can make the experience smoother for all parties involved, which was something confirmed by Dateio‘s approach.
OG: Which models of cooperation do you consider effective ones, and which arenot?
SK: Firstly, it’s important to define what models we have. I personally see three – build, buy/invest, and partner up.
In the last couple of years, we have seen a huge shift in the approach of banks. To be precise – from enemies to allies. We have seen examples of these three models become more frequently mentioned in headlines – acquisitions, huge partnerships, the launch of innovation labs, and more.
The least effective in my experience is the “build” model. We can see it in the example of payment data enrichment. It’s buildable in-house, but can you really manage it in a cost-effective and high-quality manner while not shifting focus from innovating your proposition? Not really. Also, sometimes you must act fast. An example can be the upcoming Mastercard mandate which introduces newly revised standards for the Display of Merchant Data, which will have to be provided by September 2023. A huge topic in our market. But I can’t imagine how a traditional bank with a legacy tech stack would be able to comply within 1 year effectively without outsourcing.
Speaking from our experience and proven to us many times – banks want to build products internally, try them and come back to us a few years later. While it is not always a bad approach, it definitely burns a lot of capital and delays the improvement of the end-user experience, which is crucial for the acquisition of new customers in these times.
OG: How do you, as Dateio, cooperate with banks?
SK: Depending on the size of the financial institution, the initial conversation is either through filing out RFPs (mostly traditional banks) or construct a proof of concept directly with the teams (usually challenger/neo banks), which eventually leads to API integration. Once integrated we do regular quality pulse checks and product innovation meetings.
In terms of the teams, we are mainly in touch regarding the integration of our payment data enrichment API with the product, data, UX, and innovation teams. However, we always try to improve our proposition, therefore we are tapping into guiding data analytics teams on how to work with enriched payment data and what it can bring in terms of risk scoring, CRM management, ATMs, etc.
Some great examples are – creating a customer persona journey based on their spending history or where a bank should put an ATM, based on client withdrawing behavior, just to name a few.
We see that keeping things in-house is crucial for banks and it makes sense. Providing data to any third-party is viewed as risky. On the other hand, we are living in times of ISO certifications, GDPR, etc., and in the end, it’s all about finding balance and what works the best.
This is exactly why I look forward to the panel discussion – which will provide insights and views from all sides involved.
Established in 2013, Dateio is a fast-growing venture-backed Czech FinTech on a mission to bring insights to the modern consumer. Banking partner to several top-tier banks in Europe. As of end-2021, It has been awarded Deloitte technology FAST 50 CE and helps millions of users receive value through enriched transaction data and a card-linked marketing platform.