In the last three years, the banking and fintech sectors have undergone significant, foundational changes, profoundly impacting U.S. small businesses. Much of the talk around fintech and bank partnerships highlights the Banking-as-a-Service model, however, there is enormous opportunity for banks and fintechs to work together to optimize a bank’s existing model. This evolution marks a shift from a high-risk, competitive landscape to a collaborative environment, allowing banks and fintechs to work in synergy, ultimately enhancing support for business owners and their business financing needs.
The Digital Transformation Journey
The move towards digital transformation in 2020 propelled the popularity of fintechs to new heights, positioning them as nimble, innovative disruptors in the financial industry. However, this surge in popularity and the digital frenzy left room for potential pitfalls. Security concerns and scams became more prevalent, underscoring the need for a balanced approach in the evolving financial landscape as well as enhanced regulatory framework to mitigate risks. As fintechs push the boundaries of innovation, they also need to build trust and ensure security to sustain their growth and maintain confidence.
In response to the new digital environment, many regional banks like ours set out to transform operations so they can better support small businesses. Advancing and streamlining processes, building new technological capabilities while keeping a regulatory compliant core has been a necessary priority. Allowing more traditional banks to keep up with the digital needs of businesses, all while upholding a secure structure.
Current State of Bank-Fintech Partnerships
Recently, trust in banks has got stronger. Numerous lessons have been learned across the finance industry, particularly shaping the current state of bank-fintech partnerships. There’s evident progress in the ways banks and fintechs collaborate, recognizing a mutual goal – to better serve businesses and individuals.
Nathaniel Harley is the Co-Founder & CEO of MANTL, an industry leading fintech that helps community and regional banks like ours modernize and grow. When speaking with Nathaniel recently, he highlighted how MANTL builds ‘being a good partner’ into its strategy.
“Outside of providing the technical infrastructure to optimize account opening across its banking channels, MANTL also supports banks on change management best practices, process management, personnel management, and internal communications to help streamline adoption and remove friction from the business areas that are impacted when introducing new technology and operations,” says Harley. “We take a consultative approach to our client relationships to help our customers extract meaningful value from our technology. It is a differentiating factor and critical, in our eyes, to maintaining successful, long-term bank-fintech partnerships.”
Synergy in Serving Small Businesses
Small businesses stand to gain significantly from banking with a tech-forward regional bank. Such partnerships combine superior service, robust security, agility, and a deep understanding of business needs. Banks bring a holistic view of the financial sector, covering everything from economic cycles to regulatory compliance. They can also use the wealth of experience that’s been accumulated over the years to provide valuable insights and guidance to fintech companies, allowing them to better serve the businesses of today.
Similarly, fintechs have made great strides to elevate their digital infrastructure and user experience. Together, the refreshed collaboration allows regional banks to become more niche-focused, tailoring their services with the help of technology to meet specific business needs rather than relying on a one-size-fits-all approach.
This is especially the case for first time business owners, who greatly benefit from our partnership with Spark, a fintech that streamlines the entire SBA lending process for both borrowers and bankers. Another example is how franchise businesses benefit from Boefly, a leading financial technology company that delivers innovative online tools and solutions to accelerate the franchise industry forward. By regional banks and fintechs working hand in hand, businesses gain access to a bespoke, digitally enhanced banking experience.
The Future of Bank-Fintech Partnerships
The future of bank-fintech partnerships holds immense potential. This future is not just about technological advancements; it’s about building trust, understanding each other’s strengths, and working together to create a more inclusive, efficient, and customer-centric financial landscape.