Proper due diligence of a fintech partner considers how the relationship could alter your risk profile. 7 QUESTIONS Collaborations between financial services technology firms (fintechs) and financial institutions are occurring more frequently than ever. Many financial companies see fintechs as an affordable, nimble solution to their technology gaps. Others partner with fintechs for assistance with compliance and regulatory governance. The fastest-growing fintech segment enables financial institutions to diversify their customer bases, expand revenue and even increase deposits via banking-as-a-service agreements. It is easy to recognize the contribution a fintech can make to your organization. However, it is more challenging to find the right fintech partner for your business. Ideas for how to do that is the goal of this article. We will discuss what steps you should take before entering a fintech relationship, efficient ways to conduct due diligence and ensuring the compatibility of your fintech partnership before and during the relationship. What to Know Before Committing Can the fintech you are considering produce consistent value over time? Can you demonstrate that the relationship is being appropriately managed amid increased regulatory scrutiny of third-party risk management? These are just a few of the things you will need to know before a partnership can begin. Ultimately, choosing the right fintech will come down to the quality of your institution’s due diligence. Done well, due diligence can save your business time, money and resources. It can also help focus your analysis by ensuring a potential partner can meet such criteria as: • Financially and operationally capable of providing the desired services. • Adds organizational value while maintaining proper controls. • Enhances your organization’s brand and reputation. BANKS SHOULD ASK A POTENTIAL FINTECH PARTNER By BHG FINANCIAL INSTITUTIONAL NETWORK 18 NEBRASKA INDEPENDENT BANKER
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