Partnering with large financial technology companies can be a tremendous opportunity for fintechs to gain exposure to more financial institutions and end-users. In return, large technology companies can benefit from the innovative solutions fintechs offer that can help them stand out from the competition and exceed customer expectations. Regardless, there’s no doubt that these mutually beneficial relationships regarding fintech in the banking industry are the future.
Unfortunately, few large companies have the processes in place to make building these relationships straightforward and cost-effective for fintechs. Let’s discuss the three biggest challenges fintechs face when navigating alliances and how Jack HenrySM is changing the game for fintech in the banking industry:
Simply put, most large financial technology companies do not make fintech integrations easy because their platforms weren’t developed with an open approach in mind. In addition, fintechs tend to struggle to initiate the process and find the right partner to assist them. It doesn’t help that the steps for fintech integration are not clearly outlined nor easy to follow for the average developer, either.
Some providers don’t use tech industry standards to build their platforms, which means developers must invest time into learning a specialized tech stack (at the fintech’s expense of course). What’s worse – is the knowledge, skills, and code gained throughout the process rarely transfer over because they only apply to one platform.
In many cases, the challenges fintechs face don’t end once the relationship begins. Large financial technology companies often lack the agility smaller fintechs need and benefit from. This can make working together a challenge due to opposing company cultures and lack of processes in place, which can be very slow – especially for a fintech institution that’s eager to see growth and ROI.
Oftentimes, fintechs have to work around a large company’s schedule to navigate the development and implementation process on their time. This can result in project schedule delays while the software code is reviewed, tested, and assigned for deployment as part of the large company's QA cycle – causing months of delays before the fintech is actually live and ready to be utilized by financial institutions and end-users.
Partnering with a large financial technology company is never free. Any type of development work requires talent, time, and resources. Some companies even take a percentage of the fintechs revenue or tack on additional costs for granting them access to their platform – all of which need to be considered in the budgeting phase.
Of course, there are many variables that impact how significant the initial investment will be. Does the platform use a specialized tech stack that can’t be repurposed? If so, consider the time that will be spent either recruiting unique talent or training existing developers. How long do you estimate the process will take? Each hour spent on the project diminishes the time that could be spent on other ventures.
Jack Henry has unlocked the doors to fintech innovation by granting fintechs access to our technology. We firmly believe local financial institutions deserve the opportunities to differentiate themselves and provide innovative solutions to their accountholders and communities. In fact, we believe this is essential to furthering financial equality.
Our Banno Digital Toolkit℠ grants any fintechs access to hundreds of banks and credit unions at no cost on their own timeline. In addition, it’s built on industry-standard technology and uses the same APIs that Jack Henry itself uses for BannoTM.
To learn more about the Toolkit and how you can start building out your back-office operations, please visit jackhenry.dev.
Join us for our next monthly Toolkit Office Hours where we’ll cover a range of topics including what can be built with the Toolkit, best practices for building with the Toolkit, how to get started with the Toolkit, and a live Q&A with the audience.
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