Boost non-interest revenue with a bank-fintech partnership
There’s been so much hype recently about how banks need to be more like fintechs. Financial analysts are warning banks to innovate quickly or risk being left behind. But we’re talking about banks here, not Burger King. Speed of service may be the end game in the fast food industry, but there’s way more to the picture when it comes to digital banking transformation. Banks are not flipping burgers; they are managing people’s money, and that’s an always-on everyday job.
Historically speaking, financial institutions have never innovated quickly and we like it that way. We place our funds and our trust in banks because they have strict protocols and robust risk management policies; moving fast is not in their DNA.
Fintechs, on the other hand, offer a fast, convenient, personalized experience. However, they tend to lack the deep customer relationships and banking infrastructure, backed by government guarantees and support, that is needed in today’s global, cross-border monetary market.
Partnership of equals
Consider how perfectly banks and fintechs line up in a strategic partnership. Both partners can help each other enhance the customer experience, by building, sustaining and enhancing their core competencies. Through this process, they open new opportunities while mitigating risks. Strategic partnerships are a driving force in the digital-first world; no one company can do it all.
With so much at stake in the banking world, where technological advances are happening at breakneck speed and globalization is driving open banking across borders, it’s essential for banks, credit unions and fintechs to leverage each other’s strengths, expertise and capabilities.
Every day, we see press releases announcing bank and fintech partnerships that are solving major financial challenges at scale. The evolution of real-time payments is an example of how collaboration is making the world a better place. Partnerships are the grist in the digital-first mill, driving innovation, eliminating friction and moving financial services forward.
Growing non-interest revenue
I recently attended the Financial Brand Forum 2022 at Aria Hotel and Resort in Las Vegas, where I had numerous meetings with banking and credit union leaders. Top of mind in our discussions was the need to improve profitability by identifying new recurring revenue streams, apart from traditional interest-bearing revenue.
Many of the executives I spoke with were fascinated by payment facilitation (payfac) and its potential to provide merchant accounts to their customer base quickly, efficiently and at scale. In fact, I heard again and again that their small and midsize business customers were processing with Square, Stripe and PayPal, brands that have dominated the SMB landscape for years, shutting out banks and credit unions by offering instant onboarding; simple rate structures and a portable system that enabled merchants to manage their businesses from anywhere.
My discussions at the show were enlightening to say the least. Banks and credit unions have deep ties to their customers that could be even deeper and more profitable if merchant services were in their product mix. And that is exactly what Nationwide Payment Systems, in partnership with GoDaddy, is doing: helping partners grow and scale their non-interest revenue. Through our platform, partners provide customers with on-demand access to their accounts, spending habits and financial profiles, in a secure way that protects their privacy.
Instant, managed merchant services
Finally, banks and credit unions can take back market share from Square, Stripe and PayPal, using payfac solutions to drive personalized offers to their customers. Bank and credit union customers also benefit by using these business insights to improve their overall financial health.
Automation is one of the best features of our payfac solution; we create a custom landing page with a lead funnel to track leads; once customers enter their information, they are inside our solution finder. If they need help finding what they want, they can contact us and get help or ask questions. Small business customers can visit their financial institution’s website, click the link, and get started and process payments quickly by answering 10 questions. In most cases, business owners will be approved in minutes, and there is NO PAPERWORK. Some may need to submit additional information, but approvals are fast.
Our payfac solution is transparent; FIs and their teams can view our managed services, anytime and anywhere, on demand. Status updates, customer profiles, service requests and transaction histories are all viewable from a secure web portal. Also in the program: Hardware-as-a-Service and Software-as-a-Service, eliminating worries about upgrading and updating equipment and applications, which are continuously monitored to ensure they are secure and compliant.
Bottom line, fintech and banking partnerships are here to stay. They offer the best of both worlds: enhanced customer experience and financial security.
CEO, Nationwide Payment Systems
Allen Co-Founded Nationwide Payment Systems Inc. in 2001, with the plan to sell credit card processing services and equipment to merchants in the South Florida area and provide concierge style service for each client.
The entrepreneurial bug started early in Allen’s life as comes from a family of business owners and learn about business from early age behind the cash registers at his father’s clothing stores in Miami. Later going to Culinary School in Atlanta and being a Chef, in Hotels, Country Clubs, his own restaurant and catering company.
The company started and quickly grew, products were added, processing banks and the company became laser focused on technology that would help merchants. In 2021 the B2B Vault – The Payment Technology Podcast was launched.