Voice of the Industry

Learnings for futureproof cooperation between fintech and incumbents

Tuesday 7 June 2022 09:36 CET | Editor: Alin Popa | Voice of the industry

Sunil Jhamb, the CEO and Founder of WLPayments, shares key learnings for futureproof cooperation between fintech companies and incumbents.

‘If you can't beat them, join them’ – this old idiom is also valid for the financial sector. In the early days of fintech, there were many stories about how these new agile, fail-and-scale-fast technology companies would wipe out the incumbents. Not so much anymore.

In some sectors, like online payments, fintech has become a force to reckon with, often achieving valuations that traditional financial companies can only dream of. But the big old banks and insurers are still there and, in some cases, even more profitable than before.

Still, there is a lot that incumbents are learning from the fintech industry. Fintech has a zealous focus on removing friction. By having an ease-of-use-first approach, these companies offer solutions that add value to their customers. Combined with an exceptionally technically skilled workforce, they can provide faster and cheaper solutions built on data, API, and cloud.

The incumbents, on their end, have something to bring to the table as well. Banks are accustomed to the non-stop changes and introduction of regulations, and their experience and knowledge could help fintech navigate these hurdles. Also, traditional companies can offer a brand name and a customer base that are very interesting for fintech companies to work with.


Tradition meets innovation

So, the idiom mentioned above goes for incumbents and the fintech industry alike. We see a robust trend in cooperation between incumbent financial companies like banks, insurers, and fintech companies. Banks are acquiring fintech companies, investing in this space, and sponsoring popular fintech startup accelerators – and more and more often, we see successful cooperations between these different (by nature) types of companies.


How do traditional and fintech work in a successful partnership?

The following are some of the most significant success factors that we experience as a fintech when working with more traditional companies.

Adapting to legacy systems

Legacy systems make it harder to interface with other systems and restrict banks from innovating quickly and delivering new services, products, or experiences to customers. That meant that we invested heavily in developing easy-to-integrate APIs that allow traditional companies to build on their present legacy infrastructure without hassle.

Eye for governance

When partnering with a fintech, legacy companies need the comfort that the provider can adhere to the regulatory obligations that come with the line of business in which they operate. Besides legal risk, there is a transformation risk where the financial institutions' operations run some risk, albeit small. For us, this means maintaining the highest integrity and avoiding shortcuts. We try to ensure our partners with our industry certifications and pedigree in previous partnerships that this risk is well managed.

Teamwork makes dreamwork

The key to a successful partnership is a thorough upfront assessment and a well-managed project start. There needs to be a good understanding of what each party can expect concerning response times, linkage to the different departments, and support from management. The difference in culture or 'DNA' needs to be addressed and discussed before going into a partnership.

Flexibility towards the unforeseen

As a technology company, you like to think that your technology and solutions are the best. And you should. But working with legacy partners means that you need to have the flexibility to change course. Sometimes this leads to jointly developing new tech standards and innovations you might not have foreseen.

Other important issues to consider regarding the partnership between fintech and incumbent financial companies are working on a robust business case, keeping talent and knowledge on board, and asking the critical question: what do we do if things don't work out?


Future proof relationships

Our experience and external research show that traditional banks look to improve the customer experience rather than introduce new or better products. There are many chances to add value to this subject as a technology partner. Having access to data that shows clients' behaviour and choices will provide valuable insights – and being part of an extensive network within the technology industry offers relevant input and the opportunity to suggest and create better ways to serve customers.

Fintech meets fintech

Many of the items mentioned are relevant in other types of partnerships. We have great experiences working with other fintech companies as well. Of course, lines are shorter, decision-making goes faster, and we speak the same language – but aspects like good governance, aligning roadmaps, and focusing on teamwork are still relevant to make this type of partnership a success.

We see a great future ahead, where working together with traditional and fintech companies alike will lead to better customer solutions. And that is why we do it!


About Sunil Jhamb

Sunil Jhamb is the CEO and Founder of WLPayments, a trusted global payments platform. Sunil has over 20 years of experience in consulting and strategy, and as a winner of MPE Influencer of the Year 2019, Sunil is an authority on international payments. Before this, Sunil founded Newgen Payments and worked at GlobalCollect as the global planning and strategy director – developing corporate strategies and driving revenue opportunities globally.


About WLPayments

WLPayments offers an acquirer agnostic payment orchestration platform for ISOs, PSPs, acquirers, banks, and online merchants. WLPayments offers its partners a modern and modular platform with many innovative, conversion-boosting features, taking care of all their payment challenges.

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Keywords: fintech, API, neobanks, startup, regulation
Categories: Payments & Commerce
Companies: WLPayments
Countries: World
This article is part of category

Payments & Commerce


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