We have talked with a lot of fintechs in the last year and we’ve learned some things that can help all of you, but the lessons here are especially helpful for the younger fintechs who are looking to make inroads with banks.
One of the challenges fintechs have is they are, by nature, young businesses who are often not profitable yet, and staffed almost entirely with young employees. To any banker, that inherently screams “RISK!” For a bank, the moment we decide to partner with you, we have to start writing a plan on what we’ll do if your company falls apart, or you have to transition your business.
You have to understand something here – getting a meeting with a bank is a lot like getting a first date. Don’t show up wearing metaphorical (or, it’s safe to say, literal) sweatpants and a t-shirt. Wear a suit. Here’s what we mean:
You need to position yourself to show your strengths and exactly how your fintech will mature if we create a partnership. We need our partners to be able to finish this sentence: “If it doesn’t work, here’s what you will do…” If you can’t answer that you’re putting the task on someone that isn’t an internal champion of yours, like someone in IT, or management. They don’t want to think for you. Provide what the bank needs. Make it easy upfront. Here’s how to do it in three steps.
You can go to a conference, put up a booth, and share your pitch with every banker that walks by, or send them LinkedIn messages. These may work to get your information out there, but they make it hard for you to establish credibility. But, consider this – when a friend of mine in banking calls me to say, “Check out this fintech” I’ll always take that call. So, when you’re talking to banks, don’t make it about getting a deal done. Instead, try to find a way to create some champions. Find someone in banking you respect (they might have a solution that’s as good as or better than yours) and ask what they learned along the way. Show them you care about the industry, that you’re not just a salesperson, or a founder trying to build a product. We all know how long and hard the sales cycle is for banks—we want to do it differently. A friendly banker will connect you to another banker, or you can ask for them to be a reference. I think you’ll find then that the sales cycle is much shorter.
So once you’ve got the appointment with the bank, expect “the sniff test” and understand you are inherently risky. The bank exec sitting across from you is thinking “how do we mitigate the risk of partnering with these guys?” We ask ourselves, “What compliance do you do? What does your compliance program look like?” So, now, you could come to your meeting and talk about how great your value is and what you can do for my customers. You could have the best business in the world, but if you don’t understand compliance, it can’t work for Quontic and it can’t work for any other bank. If we get a compliance issue, it’s game over. If you don’t understand compliance, talk to a banker and learn. Know what compliance issues your tech solution could create for a bank, compare your contingency plan with the competitors, and bring abundance and value to it. Then, when you present, make the first slide in your deck about compliance. Just get rid of the obstacle.
Once you’ve moved past the hurdle of the initial meeting and a successful sales pitch and you’ve got the business owners at the bank wanting to work with you, your next step is to figure out how we’re going to get this implemented. You’re going to need a core integration or access to a bank’s system. At Quontic, we’ve experienced firsthand what a failure to integrate systems looks like. We’ve had fintechs who didn’t tell us they had zero experience with our core processor and thought they could learn on the fly. Now, if they had said, “We don’t know how to work with your core,” I would have said, “No problem. Let me get someone else from another fintech that knows my core that can help you.” They’re very happy to help sister companies and they’ll give API specs on how they solved that integration issue. Know the core and if you don’t have experience, be up front—it’s not a game-changer. No one expects you to be experts in every core, we expect you to be experts in your product.
So, fintechs: Banking needs you. With everything that’s happening with the COVID-19 pandemic, there’s a need for customer service and relationships to look different. Maybe the role of fintechs in the past solely existed to get customers on board, to give them bells and whistles. But the world has changed and most community banks don’t have the ability to do community service. And now, if they’re not coming into my branch, your job is to show us how we can build a relationship with new customers.