Banks' Fintech partnership priorities are out of whack

Among banks and credit unions planning to partner with fintechs, 86% cited "improve the customer experience" as a top priority, followed by roughly four in ten who mentioned reducing operating expenses or fraud as a top priority. Only about a third considered "expand the product line" to be a top priority.

The obsession with "improving the customer experience" is maddening. As I've argued before, mid-size financial institutions could never spend enough to catch up with the customer experiences of the megabanks. The prioritization of cost and fraud reduction is also misguided. Partnerships generally take time to develop, deploy, and scale. Banks need cost/fraud reductions now.

This is all too bad because there are opportunities for banks to partner with fintechs that could generate revenue and help them differentiate themselves from the megabanks.

Banks have two bill pay-related problems: 1) Just 14% of consumers use their bank's or credit union's digital platforms to pay their bills, and 2) Of those that do, they're predominantly older consumers.

Why is this a problem? Because paying bills on banks' sites and apps offers banks opportunities to help their customers make smarter decisions about their financial lives which would (should) drive loyalty and relationship growth. But how can banks provide bill pay recommendations if their customers don't pay bill on their sites and apps?

They can't. And for the past few years, they have not succeeded in stemming the tide towards biller direct behavior. Time for a new strategy, no? How about a partnership with a fintech like Billshark that negotiates consumers' bills to help them save and shares revenue with the bank?

Radius Bank has partnered with the fintech since October 2018. Chris

Tremont, EVP of Virtual Banking at Radius declined to comment on user adoption of the bill negotiation tool or the revenue it's helped generate for the bank, but said the bank is "happy with the partnership."

It's getting tiresome hearing about the "subscription economy," but the fact remains: On average, Americans subscribe to roughly 13 services (that's also the median-half have more than 13).

Although there are a number of mobile apps available to track subscriptions, one does it exclusively with bank partners (currently only available in Europe).

Minna Technologies

partners with banks like Swedbank and Spare Bank to help those banks' customer manage the entire subscription lifecycle including: 1) Purchasing new subscription; 2) Tracking how much is spent; 3) Comparing and switching providers; and 4) Cancelling unwanted subscriptions.

It's easy to envision, however, that some consumers would be willing to pay a one-time fee to avoid the hassle of cancelling subscriptions with certain providers (have you ever tried to cancel a SiriusXM subscription?). An added benefit to banks for this kind of partnership is the potential for reductions in customer service-related costs.

One of Minna's bank partners receives tens of thousands of calls each month to block subscriptions or for chargebacks and disputes, and anticipates $5 million in reduced customer service costs from deploying the subscription management app.

We've become numb to data breaches. Many consumers believe that "all of my data is already out there" (which is nonsense-if all of your data was "out there" already, there would be no more data breaches). It's a pain in the neck to track and respond to all the breaches that occur. A new website and service from Breach Clarity makes the process easier and better-for both consumers and banks.