Fintech providers play an important role in the financial services industry. Banks and credit unions rely heavily on fintechs to sustain compliant efficient operations, process payments and other data, protect information and deliver service to customers in a variety of ways. Partnerships with fintechs offer expertise you may not otherwise have the resources to acquire. Thus, the reward for engaging with trusted providers. On the other side of the reward equation is risk inherent with third-party relationships.
The volume and value of merger and acquisition (M&A) activity among the fintech industry is increasing. We will see a steady pace of marriages between fintechs focused on diversifying their feature, functionality, and system integration efforts with fintechs looking to embark on an exit strategy. Today is the time to revisit current vendor/partner relationships and identify those partners who are better aligned with your FI. There are three areas – which are not always easy to explore – that you should focus on during vendor reviews and evaluations in an era of heightened M&A activity.
Seeking partnerships with stable fintechs aligned with your FI’s culture is increasingly important. Especially in an era of M&A activity. Transparent and responsibly managed companies reporting fiscal independence will be important factors to consider as you review vendor relations. Emotional intelligence has a place in determining which person(s) and companies you choose to do business with. In the end, FIs and fintechs depend on each other to thrive and the result is we continue to accomplish great things together.
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