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These days, fintechs are more friends than foes to banks with several collaborations between the two spheres of the financial industry

1. Partnership for regulatory compliance

I had to use a hypothesis testing model, and I had to say this is the hypothesis question, now what am I going to see in the market? Getting the right regulatory licence at a time when you are still testing, you don't even know what this is, you don't even know what specific licence it will involve and licensing takes time. So one of the things we did was to approach a bank and say this is what we are attempting to do, and this is a value for you.

In that relationship, we wanted to move quickly to the market; the bank knew that we would be agile in moving quickly to the market and the hunger, they could leverage it to understand what is possible in this space.

They are regulated, so they could be our regulatory sandbox, more like holding our hands and telling us, 'this is what you are allowed to do, this is what you are not allowed to do. When it's time to answer to the regulators, they are able to be the buffer and say this is what we have allowed them to do. And that was what saved us.

It is important because I've had people in the space who wanted to step in and build something, and sometimes, during COVID especially, it took two years to get the licence, and life had moved on from what they wanted to do and by the time the licence came.

2. Vendor relationship

They already had a technology infrastructure as much as we were building internally, it was important that we go speak to them. We used their APIs to power wallet creation for transfer and whatever service. They charged us for it, we put a slight mark up and the share of the pie typically stays with the bank.

Have a pilot at least 30 days before you sign that contract; when we pivoted to agency banking in March 2020. Just before COVID hit, was when we first deployed the first 100 terminals. If I hadn't tested the 100 terminals; if I had signed the contract with whatever partner I was working with at that time, it could have been brutal; I wouldn't have been able to get out of something that would have killed the company.

At the end of the day, you have to understand that the bank is solving for itself; you have to solve for yourself. Their stakeholders might not be the same as yours so it's important you test. After testing the 100 terminals, I was able to quickly flag clauses in the contract that would not fly and that saved the company.

3. Strategic investment

We haven't seen bank and fintech strategic investment, and I think it is important. To remain appealing and competitive, banks need to move into an agile customer-centric organisation. Like you see, even the telcos are trying to be fintech at heart. But by becoming it, it's not just about branding; it's about the culture from inside, it's about the people. And so sometimes, that strategic investment is a pipeline to having fintech talents come to change things from within. We need to see such mergers and acquisitions within the space.

4. Research and product market collaboration

Oftentimes, one of the challenges is that there is always a conflicting goal; what the fintech wants and what the bank wants. At the end of the day, they want the same thing, the customer, that could be a challenge

Danielle - Fincra Editorial

Author Danielle - Fincra Editorial

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