You know that standard job interview question: Can you tell me about a time you made a mistake and what you learned?
Boy, do I have a go-to answer.
It’s always about communication
When I was in consulting, I was on a team tasked with merging two large health maintenance organizations. Each had its own health clinics. One key element of the merger involved physically merging medical records.
To tackle this, physician leadership, IT, medical record experts, and I convened and “agreed” to the logic that would be used to determine where each medical record would go, given the planned new configuration of medical office buildings.
Notice “agreed” is in quotes.
That’s not because there was conflict but because we failed to clearly define some of the key assumptions. Different teams, it turned out, defined key terms differently.
So a million records were moved over a single weekend. The plan was executed “perfectly.”
Except the result was a total disaster. The requirements were all wrong.
What we had here was failure to communicate. We—the leadership, IT, medical records team, and consultants—were speaking different languages.
Bridging bank-fintech gap
Language—understanding nuances in communication—is critical when working with others. This is especially true when very different companies partner.
In the financial services space—where I help establish and manage relationships between my company, Elevate, and banks—forward-thinking fintechs and forward-thinking banks see one another not as competitors but as potential partners.
Fintechs and banks are fundamentally different. They prioritize matters differently and have different strengths and weaknesses. This makes them great, complementary partners, able to collectively build better products and services than either could alone.
On the flip side, this often means fintechs and banks are speaking entirely different languages. Communication and a recognition of their fundamental differences is key.
What fintechs can learn
A word of advice for fellow fintechs? Speak bank.
1. Learn their language. Understand your bank partner’s hot-button issues, what keeps them awake at night, what pain points their customers face, what drives their business forward. Get on—and stay on—the same page.
2. Be empathetic. Fintechs often have the luxury of serving a very specific target market. They often move fast. But remember that the bank has more products and priorities than just you, the fintech partner. Understanding what they need should be your first goal.
Banks have faced hurdles serving Elevate’s target market (non-prime consumers), and these Americans often have few options before choosing overdraft, payday, pawn, title, and storefront installment loans. Our partnerships combine our strengths—knowledge of the market, our underwriting capabilities for a difficult-to-underwrite segment, and our product design strengths—with a bank’s strengths—including an established customer base and marketing channels, compliance expertise, and access to lower-cost capital.
But it’s not simple. Actively listening, understanding one another—and importantly, the end customer—help forge sustainable, mutually beneficial collaborations. When partners are forthcoming, we can all agree—and with no quote marks. We can speak and use the same language to achieve mutually beneficial business goals–creating products that benefit the bank, the fintech and millions of consumers who need better options.
A challenge for bankers: define goals
In recent years, I have seen banks become increasingly more and more keen to partner with fintechs. Ultimately, the opportunity for banks is compelling. Collaboration is a great strategic means of growing the top and bottom line. But to accomplish that, banks much clearly define the end goal. For some, it may be access to the technology or talent. For others, it may be access to new customers or expansion of existing customer relationships.
As it becomes clear that both banks and fintechs are here to stay, I have been impressed with banks’ ability to invest in dedicated resources, compliance, and vendor oversight—this as fintech partners invest in their own compliance and monitoring. This trend in convergence is a sign of further collaboration in the future.
And those misplaced medical records? As a team, we regrouped, level set, and got on the same footing. We were able to re-do all the medical record moves and correct the error, once we were all speaking the same language. It would have been nice to start from a place of true understanding to avoid the issue altogether.
About the author
Kathy Boden Holland has been on both sides of the bank/fintech partnership equation. As the executive vice-president of bank products at Elevate Credit, she is responsible for identifying, creating, and managing successful bank partnerships for fintech lender Elevate. She previously led online partnerships as President of RLJ Financial LLC and as executive vice-president of Urban Trust Holdings, a bank holding company. In addition to banking, her entrepreneurial background includes Big 5 consulting and start-ups.
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