Should a Fintech Partner Fuel your Faster Payments Strategy?

A fundamental shift is happening to the banking industry as solutions like FedNow and The Clearing House’s RTP network continue to grow in popularity.
Many legacy cores already offer varying degrees of faster payments solutions, but selecting a fintech partner can have its benefits. A fintech that offers solutions built on the latest technology can equip financial institutions to remain agile as the payment landscape evolves and ultimately, gain a competitive advantage early on by making it faster and easier to deploy real-time payments.
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Why Work with a Fintech?
Many fintech providers combine cutting-edge technology with more personalized customer service, making them a stand-out choice for many community banks. In comparison to legacy core providers, which often have many layers to go through to reach certain experts and get questions answered, fintechs are typically leaner organizations. This means your community bank will likely have fewer hoops to jump through to get answers to your questions and will have more influence in the overall project.
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In addition to their strong customer service, today’s fintechs build their products on modern, cloud-native technologies.
As Pidgin founder and CEO, Abhishek Veeraghanta said in a BankBeat article earlier this year, “Flexibility is a key component to faster payments technology.”
“As new use cases are identified, and banks adapt to customer needs, banks must consider how faster payments technology will help them differentiate their product offerings and remain competitive. Ideally, banks will choose a solution that effectively serves their customers, both now and long term,” he says.
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Checklist for Vetting Potential Fintech Partners
While there is no ‘one-size-fits-all’ instant payments solution provider, there are a few things to consider. Banks should thoughtfully evaluate their options, assess which ones best meet their organizational needs, as well as the needs of their customers.
Financial institution leaders should consider a few key questions. Does the fintech we’re considering have the same risk appetite as our institution? Can they provide the integration you need, and the experience that best represents your brand? Will the fintech still be in business in a few years’ time? If not, what is our contingency plan? These questions can help your bank reduce risk and objectively vet potential partners.
Beyond evaluating vendors and different payment solutions, financial institutions should also consider the implementation and onboarding process. Will they have the integration capabilities your bank needs to expand its payment offerings in a way that suits the institution’s operations and customer demands? Oftentimes, core offerings will be limited in this regard, as legacy cores are built around batch-based transaction processing and have limited flexibility when it comes to integrations.
Veeraghanta raises another point in Independent Banker about this, “We like to be high touch … but beyond that, we try to simplify the process because … we understand that the bank’s IT team still has to run a bank, and the bank’s ops team still has to process their existing transaction volume. We create a structured project plan and checklist for banks as far as what they have to do between deciding they want to go live and going live.”
This is especially important for institutions looking to use multiple faster payments networks. For example, if your bank wants to use both FedNow and RTP, there are specific onboarding requirements for each, different liquidity management capabilities, and other nuances, so focus on finding a partner that is already plugged into both of those networks to simplify the process. A partner that takes a one-to-many approach reduces complexity and time to market, which benefits your institution in the long run.
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Fintech: Fuel for Your Faster Payments Strategy
Financial institutions face an expansive array of payment options to provide account holders with the speed and security they expect when transacting. Navigating this evolving market and keeping up with emerging use cases can seem daunting, but an experienced fintech partner can make the transition to real-time payments easier, and even more profitable for your institution.