Global report finds that partnerships do not meet expectations despite being considered critical by executives
There is a seemingly constant stream of announcements by traditional banks about their partnerships with FinTech disruptors.
With the digital transformation often leaving long-established financial institutions playing catch up, linking with more agile and technologically advanced partners makes sense.
However, a new report reveals that few of these partnerships are really working for either bank or FinTech.
Global consultancy Oliver Wyman surveyed bank executives with 80% of respondents saying that partnerships are critical to the success of their strategies.
“Banks have recognized the need for partnerships but are finding that executing them at scale is not easy,” said Pierre Romagny, financial services partner at Oliver Wyman. “Success in isolated cases is not enough when partnerships have become so central to deliver banks’ strategies.”
However, just 6% of banks that have partnered with FinTechs have achieved the return on investment they required.
“Given the size of the opportunity, and the low starting point, the case for change is clear,banks must master the art and science of partnerships,” added Romagny. “The majority of banking partnerships do not meet anyone’s expectations, be it the banks or their partners.”
He added that banking industry partnerships have often been opportunistic or experimental and the banks are lacking a clear framework for two-way value creation.
5 routes to success
The report provides banking executives with 5 tips to get partner-ready:
- Codifying the demand for partners: Banks must outline clearly what they want the outcome of the partnership to be and the key drivers of the partnership. This will create a bank-wide partner strategy.
- Formalizing the partner engagement models: Banks must outline a practical partner typology which is unique to each partnership, bearing in mind each partner brings a different value proposition.
- Adopting a partner-ready organizational structure: By adopting a partner-ready organizational structure, the partner competencies are already embedded within the organizational structure.
- Embracing continuous learning: Similar to how banks monitor customer experiences in order to enhance their efforts and meet expectations, the same must be done for partners.This allows banks to create accountability and strong incentive to improve their standards.
- Digitalizing the partner capabilities:This involves following other industries and creating digital partner portals. Digital partner portals can fix key substandard processes such as onboarding. The portals standardize processes which improves the partner experience.
