Long-term contracts used to be an attractive option to help secure lower prices and insulate from annual price increases, but could your contract hurt your financial institution in the long run? Here are four reasons why this July 4th is a great day to declare independence from prohibitive fintech contracts and empower your institution to thrive in a faster, smarter world.
Fintech partnerships are playing a bigger role in banking.
Between pressures from behemoth megabanks and plucky online upstarts, traditional banking’s survival hinges on strategic partnerships with fintech companies. According to PwC’s 2017 Global Fintech Report, 82% of financial institutions expect to increase fintech partnerships within the next 3-5 years, with 63% of bankers seeing the rise of fintech as an opportunity to expand products and services. Fintech partners can help your FI in the evolution without re-inventing the wheel. Look for a partner willing to share the risk and offer contracts that allow them to demonstrate their value before entering into a long-term commitment.
There are more choices than ever.
Global fintech investment has nearly doubled since 2014, creating a massive suite of products and services to help grow your institution. These alignments are becoming a key piece of 21st-century banking (especially among millennials), so getting locked into a partner who isn’t a good fit means falling behind.
A customer-centric attitude is vital.
According to Temkin Group’s 2017 CX Research, a bad customer experience will cause 22% of consumers to decrease their spending, and 19% of consumers to entirely stop doing business with you. Whether you’re using a branded partner or a white-labeled suite, your institution and brand will be tied to any bad customer experiences, and cardholders have the mobility to switch banks that you may not have with bad vendor contracts.
Business should stem from results.
“Vendors in this industry will need to earn business on the merits of their offerings, not because they’ve locked customers in to contracts,” says Buzz Points CEO, Dwayne Spradlin. A thirty-day trial may not be long enough to see a determinable impact, but a years-long contract with a prohibitively-high exit fee can trap you into an unwieldy deal that isn’t maximizing your institution’s resources.
The right fintech partnership can have an exponential impact on your revenue and customer satisfaction. Get it right and you’ll have a customer for life, get it wrong and the damage can be hard to contain. It is imperative to ask the right questions, choose the best fit, and ink a deal that empowers, not enslaves, your institution. This Independence Day, break free from the bad and rise to the top.
Ben has been with Buzz Points for over five years. When he’s not empowering community financial institutions, you can find him cheering on the Houston Astros and searching for the best pizza in Texas.