Financial technology is plentiful – recent estimates put the total number of SaaS companies at 17,000 across the United States as demand for cloud-based services continues and the pace of technology continues to expand. These companies significantly outnumber the total number of 4,577 FDIC-insured banks in the country.
It makes sense that financial institution decision-makers are inundated with trends, tools, and emerging tech. So, what do they need to know to cut through the noise and identify the key investments that boost revenue?
Save Money & Time By Leveraging Technology Partners
Most financial institutions are not known for building their own technology. Like any other industry, they are right to focus on their specific area of expertise and partner with technology companies to enhance their offerings.
For example, it’d be good for the bank executives to determine what their unique differentiator is. What sets them apart from other financial institutions? Is it unique access to customer data? Is it the type of size of customer? Is it the management team’s expertise? Once determined, the bank can then figure out how to leverage the unique differentiator in combination with a technology partner to create something special in the market.
Throughout the year, we speak with many financial institutions that attempt to create bespoke technology solutions in-house but struggle along the way. They often face long delays and ultimately give up. That’s a significant amount of their budget wasted, considering that banks spend more on information technology than any other industry, approximately 6-12 percent of their revenue.
Last year, we spoke to one bank that decided to create an in-house mobile-only small business banking solution. Yet, six months later, at our next check-in, they had not progressed any further. It’s not that banks don’t have intelligent professionals on staff, but it takes significant resources and time to bring a product to market.
Reframe the Business Relationship
Having trusted partners is critical in business, and I’ve long considered that the word “vendor” can quickly cheapen a relationship. Technology firms invariably are partners to banks.
When we built Lendio’s Intelligent Lending program, we learned heavily on the insights and expertise of our trusted banking partners, Zions Bank, Texas National Bank, and CC Bank. Through multiple alpha and beta testing periods, we exhaustively workshopped slide decks and working prototypes to ensure our product would succeed with the end user. For example, when working with CC Bank, we realized that we needed to build an Adverse Action notice to demonstrate why a customer might be denied a loan; without it, our product would not be viable.
Financial technology cannot exist in a vacuum. The very best fintech organizations know this.
Look beyond SaaS companies as more than technology vendors. We’ve learned a significant amount working closely with our banking partners through the years. It’s inevitable that these same technology partners will have valuable feedback to share about your customers’ technology preferences, too.
Separate Signal From Noise By Aligning Technology With Your Brand
So, how can decision-makers at financial institutions identify true value over trendlines and find the right SaaS provider?
Consider your strategic growth plan. Will increases in deposits, lending, or mortgages help your bank scale? If you know that information, it will be easier to solve the equation. Remember: there’s a software provider for just about everything. Conducting an RFP that is tightly aligned with growth metrics will provide an apples-to-apples comparison and help to identify the companies that are not the right fit.
We just finalized a partnership with Grasshopper Bank, which confided early on in our conversations that it wanted to be a tech-forward bank but knew it needed support in this area. So, it sourced best-in-class technologies, which allowed it to quickly identify, adopt, and implement the right partner to drive the results it craved. Their differentiator is speed (and it showed in the evaluation, implementation, and onboarding process).
As they always have, technological innovations will keep pace with demand. Banks that understand their identity and trust the right partner will compete better than the rest.
