A recent McKinsey survey of DACH region start-up leaders found that three-quarters of startups consider partnerships with corporates very important, yet only one in four startups are completely satisfied with their partnership relationships. The conclusion is clear: finding the perfect partner in business isn’t always easy.
In the fintech world, historically, there has been a culture of competition between firms, with rivalries acting as a barrier to forging partnerships. However, the global pandemic and shifting consumer and business expectations have acted as a catalyst for greater collaboration between financial services businesses as companies look to partnerships as a way to improve their core business offering.
Nowadays, partnership announcements dominate the news as fintechs and financial services firms of all shapes and sizes launch new collaborations. However, as the above survey of start-up and corporate leaders tells us, partnerships do not always deliver the desired outcome. For those in the fintech space, this brings to mind two questions. One is the question of why partnerships are becoming more critical to fintechs. The other is to understand how a successful fintech partnership can be formed.
From alternative payment methods to crypto and ESG payment insights, the fintech ecosystem is becoming larger by the week. Fintechs recognise that they cannot do everything themselves, and there is an opportunity to lean into the broader ecosystem to work together in order to improve their product offering. Partnerships are increasingly also being recognised as a sales stream, revenue generator, and way to build credibility for fintechs.
This shift in mindset within financial services has resulted in greater collaboration and opportunities to work with other companies beyond just knowledge sharing. Furthermore, with the economic picture dimming across the globe, fintechs have to be smarter with how they spend their time, money, and resources. In response to this, there has been an uptick in fintechs working together to retain and win new business.
Partnerships are now viewed as a critical cornerstone of any growth plan. For example, fintechs looking to reach new markets, such as in the alternative payment methods space, view partnerships as a viable strategy to expand their offering and increase their profitability.
Clearly, partnerships have massive potential to aid any fintech’s growth and expansion plans. Yet, not all partnerships are successful, and the rules of the road can be unclear when forging successful partnerships.
Having worked in partnerships for BR-DGE and Visa, building hundreds of partnerships with financial institutions and fintechs, here are my top tips to ensure a partnership is a success.
Tip 1: Understand your requirements first, find a partner second
Before creating your first partnership, it is vital that you understand your own motivations and how a partnership will help both businesses to achieve your shared aims. Being clear on your aims enables you to define the key objectives you want to achieve or problems you wish to solve from the partnership work. This process helps you to not only find the right partner but also to ensure that the relationship truly benefits both companies.
Tip 2: Strong relationships will dictate the success of the partnership
The best and most successful partnerships are when the relationship is the strongest between both firms. The importance of relationship building with key stakeholders cannot be understated and will define how successful the collaboration will be. By having solid relationships in place with key stakeholders from the start, you will ensure that the partnership is smooth and easy to deliver but also built on a relationship of trust.
Tip 3: Bespoke partnership agreements yield the best results
Everyone in fintech wants to move fast and deliver results at speed. However, in the partnerships world, speed does not always deliver the best outcome. By taking the time to look beyond a copy-and-paste agreement, companies can build a bespoke plan tailored to each partner’s specific offering, goals and objectives. In the long run, this will yield the best results for both fintechs as the agreement will genuinely reflect the unique aims of each partner.
Tip 4: Continue to nurture your partnership relationship
For any fintech, signing a partnership agreement is a brilliant moment after months of back and forth with your partner company. Whilst on the face of things, this might seem the tricky stage, the most critical stage actually comes in the next phase. Post-agreement, it is essential to be proactive and check in regularly with your fintech partner. First-hand, I have seen how being proactive from the start nurtures and improves the partnership relationship whilst creating growth opportunities for both partners that you can share together.
Tip 5: Be bold
My most important advice is to aim high. You may be a small fintech, but that doesn’t mean you couldn’t help a sizeable traditional firm solve its pain points at speed or deliver something that pushes the boundaries of your industry segment. Constantly ideating and innovating when exploring partnerships, with no restrictions on where your thinking may take you, can lead to some of the most successful and exciting partnerships I have seen to date.
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About the Author:
Tom Voaden is the Strategic Partnerships Lead at BR-DGE.