Among the different types of non-bank partnerships you can get into, you should prioritize a payment processing partner. Why?

A study by Forrester Consulting found that “Partnerships contribute a high and growing share of overall revenue for companies.” 

“Over half of the companies we surveyed (52%) get more than 20% of their revenue from the partnership channel.” On average, partners contribute 23% of overall company revenue. With an average partnership revenue growth rate of 17.5% and 77% of companies prioritizing partnership development as a key 2019 initiative, the importance of partnerships will continue to rise.”

We call it “the power of strategic partnerships.” And this kind of B2B channel partnership benefits all parties. They help both bank and payment tech firms:

• Have a competitive edge to surpass their competitors
• Grow their customer base
• Strengthen their weak spots
• Have access to additional resources

Why Banks and Tech Firms Are Partnering

In today’s fast-paced, technology-driven world, it’s no secret that the banking industry is undergoing a significant transformation. And banks need to stay ahead of the curve to remain competitive.

While it may be tempting to rely on tried and tested methods, the reality is that consumers are increasingly expecting faster and more convenient ways to manage their finances.

Here are some reasons why partnerships between banks and payment technology companies are becoming increasingly common:

• Customers demand innovative payment solutions that offer faster, more secure, and more convenient ways to pay.

• Change in the regulatory landscape is pushing banks to seek out partners to help them comply with new rules and regulations.

• Partnering with tech firms is helping banks tap into new markets and customer segments, expanding their reach and growing their businesses.

• Cybersecurity is a major concern for banks and their customers. Payment technology companies provide secure payment solutions that help them protect their customers’ data and prevent fraud. 

Benefits of Partnerships for Banks

The Fintech Effect 2021 study found that “fintech is more widely used than social media, placing fintech among the most widely adopted consumer technologies outside of the internet.”

This clearly shows that banks have an opportunity to capitalize on the growing demand for fintech solutions by partnering with payment technology companies.

Some popular solutions fintech provides include:

• Hosted Payments
• ACH Processing
• IVR Payments
• Credit Card Processing
• Email Invoicing
• Virtual Terminal
• PCI Scope

Here are some of the partnership benefits for banks:

#1: Save Millions in Infrastructure and Development Costs

Partnering with payment technology companies saves banks millions of dollars in infrastructure and development costs.

Rather than investing in expensive in-house development, banks can leverage the expertise of payment technology companies to create innovative payment solutions.

This allows banks to keep pace with rapidly evolving payment technologies without costly infrastructure investments.

#2: Retain Existing Customers Longer by Improving Customer Experience 

Before the internet, payments would take several days to process. However, through SaaS partnerships, banks can now offer their customers tools that provide a more convenient and seamless payment experience.

Banks can offer ACH payments by partnering with a payment tech company like iCheckGateway.com, allowing customers to access their funds almost immediately.

Payment technology companies also provide banks with mobile payment solutions that allow customers to make payments on the go.

#3: Benefit from Increased Efficiency Across AP and AR Processes

Inefficient payment processes lead to delays, errors, and increased costs.

Banks take advantage of solutions offered by tech firms to automate payment processing, thus reducing the need for manual intervention and saving time and resources.

So banks can help their customers pay and accept payments online securely.

#4: Leverage the Experience of Being Compliant with the Latest Norms

Banks must comply with data protection regulations, like GDPR and CCPA.

For example, Payment Card Industry (PCI) compliance is a critical concern for banks that handle credit and debit card transactions. Maintaining compliance with PCI standards can be complex and time-consuming, requiring significant resources and expertise.

However, payment tech companies have the resources to help banks reduce their PCI scope. They provide solutions like tokenization.

So by reducing the amount of sensitive data banks handle, they simplify their PCI compliance requirements and reduce their compliance scope.

Benefits of Partnerships for Payment Tech Companies

Strategic partnerships between banks and payment technology companies are mutually beneficial. Both parties leverage each other’s strengths to create innovative payment solutions.

For payment technology companies, bank-tech partnerships offer several benefits, including:

#1: Increased Market Reach by Tapping into New Customers with More Solutions to Offer

Fintech companies often have innovative payment solutions that have yet to be widely adopted.

“In general, fintech market data shows growth, though it encountered a hiccup in 2018. Its growth rate seems slower than anticipated because any new innovation will always encounter resistance.” —Astrid Eira

By partnering with banks, payment technology companies can tap into the banks’ customer base and expand their market reach.

Banks provide these companies with access to a large customer base and established brand credibility, which can help them increase their brand recognition and reach new markets.

#2: Improved Credibility and Business Opportunities by Partnering with a Reputable Bank

Payment technology companies are often viewed as disruptors in the financial industry, while banks are seen as established and trustworthy institutions.

Partnering with banks and payment tech companies can improve their credibility and reputation, leading to increased customer trust and adoption of their payment solutions.

#3: Increased Revenue by Partnering with Large Banks 

Revenue growth is a top priority for every company.

Banks pay fees to payment tech companies for the use of their payment solutions. And payment tech companies gain access to new revenue streams by providing payment solutions to the banks’ customers.

What to Consider Before Entering a Tech Payment Partnership

How do you know if a SaaS payment partnership is right for your business? The association requires careful consideration to ensure that it’s the right fit.

A bank-fintech partnership study by Cornerstone Advisors found that over the past three years, nearly two-thirds of banks and credit unions have entered into at least one fintech partnership, while 35% have invested in a fintech. Moreover, 37% of those who haven’t partnered or invested plan to partner in 2022, and 18% expect to make a fintech investment in 2022.

So what key factors should these banks and credit unions consider?

• Strategic Alignment - Both parties should have a shared vision and goals for the partnership and should be able to work together toward achieving these goals.

• Complementary Capabilities - The bank and payment technology company should have complementary capabilities that can be leveraged to create innovative payment solutions. For example, the payment technology company may have expertise in developing payment processing solutions, while the bank may have an established customer base and compliance expertise.

• Technical Compatibility - It’s essential to ensure that the bank and payment technology company’s systems are technically compatible. This includes ensuring that the payment technology company’s solutions can integrate with the bank’s existing payment processing infrastructure.

• Regulatory Compliance - Both parties should comply with all relevant regulations and standards. The partnership shouldn’t pose any compliance risks.

• Risk Management - Both parties should assess the potential risks associated with the partnership and develop a plan to manage these risks.

How JPMorgan and Wells Fargo Benefitted from Tech Partnerships

JPMorgan Chase—Square and PayPal Partnership

In 2020, JPMorgan Chase launched a service called QuickAccept. 

QuickAccept is a payment processing solution that allows JPMorgan Chase’s small business customers to accept card payments using a mobile app and card reader.

The service is designed to be easy to use and provides real-time access to funds, making it a convenient option for small businesses.

With QuickAccept, JPMorgan Chase can expand its payment processing capabilities and offer its small business customers a more seamless and convenient payment experience.

Wells Fargo and Intuit

Wells Fargo and Intuit, the company behind QuickBooks, Mint, and TurboTax, got into a data-sharing agreement where the bank customers are not required to share their passwords when they access the Intuit sites.

This means that when Intuit customers want to set up or add a Wells Fargo account on Mint, QuickBooks, or TurboTax, they are securely directed to a Wells Fargo server.

According to Brett Pitts, head of digital, Wells Fargo Virtual Channels, this partnership allows for a more seamless and secure customer experience for both Intuit and Wells Fargo customers.

Become a Partner

If you are a bank looking for a reliable and experienced payment technology company to partner with, talk to us at iCG.

We are committed to providing our partners with the highest level of service and support, helping them meet their customers’ evolving needs and stay ahead of the competition.