[Editor’s note: This is a blog post from Executive Director for Deluxe Performance Marketing. Deluxe Performance Marketing is a gold sponsor at LendIt Fintech USA 2018, which will take place on April 9-11, 2018 in San Francisco.]
There’s been no shortage of content here and elsewhere on the emergence of bank-fintech partnerships.
But I think much of it misses the mark, especially as it relates to bank marketing for loans and deposits. For banks, partnering with fintech firms in marketing is not merely a good idea, it’s an absolute imperative.
To start off, let’s point out that all bank marketing is outsourced already. That’s not a judgement of their marketing teams – it’s just the reality of how marketing works. You may have internal people who conceptualize, plan, implement, and track your campaigns – but they are outsourcing the marketing implementation – at the very least the last mile and in some cases much more. Outsourcing to Google for keyword bidding, to holding company agencies for creative and ad placement, to the USPS for logistics and delivery, to Facebook for targeted messaging, to the local paper for rate sheets and promotions, to Lending Tree and Credit Karma for lead generation, and so on.
That’s why marketing teams have marketing budgets.
And what’s amazing to me is that some bank marketers have been slow to realize that their success relies on their ability to build and foster excellence through a supply chain. Bank marketers spend billions each year through third-parties – yet they still talk about fintech partners as if they represent some sort of seminal shift in the world of financial services.
Fintechs pose much more of a threat to the traditional supplier network than they do the banks.
So while partnering in bank marketing has always been important, what is driving the urgency now?
Bank customers demand highly functioning and seamless digital experiences. They expect easy loan application processes that minimize data entry and turn around decision and funding in session-time. They expect configurable communications, inbound and outbound, via the channel of their choosing and on the cadence of their choosing. They expect to conduct every possible interaction, including account opening, without being require to walk into a branch. They crave AI-driven advice and AI-fueled interaction channels. With mobile payment processes, remote deposit capture, 24/7 access and service, and high degrees of security all to boot.
While it is possible to develop these capabilities in house, the best solutions already exist, developed by fintech providers who are ready to partner with the bank. Hundreds of millions of dollars of funding has been poured into the development and commercialization of these offerings.
Why would a bank attempt to do it themselves? The best bank and finance company marketers are the ones who can free up their resources to focus on customers’ expectations relying on a chain of partner solutions integrated in a seamless, brand-appropriate experience.
If internal bank technology development is slow, so too is bank procurement – which can put partnering on the same timeline as in-house development. But procurement is easier to change. Partnering with fintech providers requires a rethinking of traditional vendor onboarding approaches. The best banks will develop “shelf approvals” or “fast tracks” specifically designed for test and pilot programs: limited in scope and bounded by time. Rather than manage risk with onerous, lengthy, one-off program reviews, manage it with strict controls on exposure. The point of pilots with fintechs is to learn, and learn quickly.
The best banks will also build up the partner muscle. Swapping out vendors for partners requires a fundamental shift for the marketer: from internal facing to external. Bank marketers need to engage in the fintech ecosystem and seek out innovations that could help solve their particular challenges. Winning banks will also learn how to leverage the expertise of their fintech partners – with proactive strategic engagement, and collaborative problem solving interactions. These fintech firms are subject matter experts on their particular field or product – and their ultimate success depends on driving great outcomes for the bank.
Bankers: don’t keep your partners at arm’s length, bring them in. And if two somewhat competitive fintechs need to collaborate to move a joint client bank KPI, then so be it.
Fintech partnerships in bank marketing don’t need press releases and equity investments. Think of them as participants in your existing outsourcing network. Try making it easier to onboard them with program boundaries; commission a pilot and read result. And engage with your partners to help set the program up for success. Just like with any other supplier, fintech success ultimately relies on bank success.
Rich Walker, former head of Card Marketing at Capital One, is now the Executive Director for Deluxe Performance Marketing, a CPA prescreen direct marketing solutions for banks and lenders.