As the expression goes, “the only constant in life is change,” and the financial sector is no exception. Since the pandemic began over two years ago, several financial institutions have experienced substantial digital transformations as a response. Many FinServs that were already on their digitalisation journey have proceeded to develop their digital products to meet their customers’ demands. Meanwhile, the pandemic effectively compelled financial institutions that had been hesitant or had not yet proceeded to integrate new technologies to begin the process. While digitisation is crucial to developing an organisation, keeping customers happy, and preserving a competitive advantage, managing each FinTech collaboration to optimise the investment can quickly become complicated.

During a Future Processing roundtable, speakers with extensive expertise in the technology sector shared their knowledge and experiences. Jarosław Granat, Head of Client Engagement at Future Processing, Ian Max Ewart, CRD Advisor at Acin, and Irfan Khan, CEO of mmob, all joined in on the discussion around partnerships and innovative software.

Elements of a successful partnership

Partnerships in the financial services sector have risen significantly since 2016, with the number of new partnerships announced globally more than tripling in the previous three years. The shift to online behaviour and the accompanying eCommerce expansion has propelled global FinTech partnership development. Building a partnership ecosystem is complex, however, it is the only way to truly transform an organisation.

One of the most significant aspects of forming meaningful partnerships is the ability to network with organisations that share the same objective. Other valuable elements include the ability to introduce new goods or services to an organisation, the availability of talent in a turbulent market, and the potential to address a skills gap within the company. The importance of partners constantly learning about one another’s businesses and aggressively seeking opportunities to enhance or innovate cannot be overlooked. Overcoming challenges collectively, rather than in silos, is critical to being successful in an increasingly competitive environment.

Reviewing the onboarding process

However, modernising the most closely regulated and scrutinised industry is no simple task and given the importance of financial infrastructure to businesses and consumers alike, the implications are significant. Prolonged onboarding procedures are being caused by rigorous procurement processes, cultural differences, and risk-averse attitudes, which continue to be key impediments to effective collaboration between FinServs and FinTechs at a time when digitalisation in the sector is critical.

Creating partnerships is a time-consuming endeavour under existing government restrictions. The process is not designed for rapid adoption. Before they even begin to innovate, organisations have time to explore, test, and learn. The several tiers of laws are impeding the onboarding process; nevertheless, the culture and attitude toward risk of the organisation are far more important factors. Additional concerns may occur in the context of financial due diligence, data, and contractual rights. This means that, while collaboration is desired, the process of achieving an agreement might be cumbersome.

Future of collaboration 

The issue of digital transformation in the financial services industry is not new but following two years of increased innovation spurred on by the pandemic, solutions for evaluating and supporting FinTechs are developing. These methods may finally overcome the limitations of FinServ-FinTech collaboration. However, as FinTechs wait for new initiatives to grow and evolve, they must evaluate what they can do in practice to provide confidence to the FinServs with whom they want to collaborate in the face of a shifting regulatory environment.