Partnerships with fintechs have been instrumental in helping challenger banks to quickly scale up, reach new markets, and broaden their product and service offerings.
It’s difficult, if not impossible, for a new digital bank to make a significant impact doing it alone, and most successful challengers today work alongside a network of specialist fintechs. However, relationships that seem like a positive collaboration often turn out to be parasitic.
What is a parasitic partnership?
This can happen when a challenger, often unwittingly, cedes control to its partner over the experience it delivers to its customers.
Imagine you are a challenger looking to strengthen your proposition by partnering with a specialist fintech platform in order to offer cross-border payments services to your customers.
If they are used to a quick and painless experience when making domestic payments, your customers may be surprised – and frustrated – to have to leave your interface and switch to your partner’s platform in order to complete a cross-border payment.
If they then have to verify their identity for KYC purposes, and don’t have their passport or other ID to hand, they may end up having to restart the whole process from scratch.
And, what happens if they have technical issues while trying to verify their identity and complete their payment? Do they reach out to you, as the bank that holds their deposits, or to your partner, the platform that’s actually moving their money? For the customer, it’s a frustrating and confusing experience, and some may choose a third option – taking their business to a provider that does the same thing without the headaches.
For you as a challenger though, what really makes this type of relationship parasitic is the way it shifts power and control to your partner.
If your customer has to sign up directly with your partner’s platform, not only do you lose control of the user experience from that point onwards, your partner also gains access to your customer’s data, which could have far-reaching consequences.
If your partner launches its own challenger bank, what would stop it from marketing directly to your customers, and encouraging them to bring their deposits over?
What makes Currencycloud’s approach different?
Unlike many of our competitors, we have never had a direct-to-consumer offering. In scenarios such as the one outlined above, our customer is the challenger bank, and the challenger bank alone.
When we partner with a challenger, there is no danger of us trying to steal customers – or of the relationship becoming parasitic. The end customer can’t use our technology to send or receive money internationally, or trade foreign currency, without leaving the challenger’s platform.
If your partner has access to your customers, then it’s only a small step from becoming your competitor. A lot of our customers, particularly in the US, are waking up to this threat. What we’re doing – and this is where our challenger customers are seeing the greatest value – is providing the technology that enables them to compete with these parasitic providers on a global basis.
Partnerships and collaborations keep our industry moving – and are the reason why challenger banks have become one of the most remarkable success stories in financial services over the past decade. But as with any partnership, it’s imperative that challengers understand exactly what they are getting into. That means joining forces with partners who will always work with them, not against them.
Get in touch if you would like to find out more about partnership opportunities with Currencycloud.