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Banks have an opportunity to be stable, well-financed technology disruptors when working with appropriate partners. By partnering with technology providers, banks can combine their financial strength and market power with the innovation and speed of high-tech product companies, enabling banks to compete against newly formed fintech startups.
To talk more about how banks can differentiate themselves from fintechs through strategic tech partnerships and what that means for corporate innovation, PaymentsJournal sat down with Scott Goldthwaite, President at Aliaswire, and Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.
Partnerships enable banks to compete with fintechs
“The financial services industry has always been a technology-driven set of business models; fintech is really nothing new here,” said Murphy. Banks have been working with technology partners for a long time, including core service providers and dozens of other software and product categories.
“However, in the past few years, it’s become increasingly evident that a fast evolution to partnerships and collaboration between these sectors is becoming more the norm,” Murphy added. “Banks are adapting to the reality that they can’t provide required services and new products using legacy solutions, and fintechs are realizing that working with and through banks is a better distribution model for their products.”
As a result, the vast majority of banks are now using alternative technology providers, with the number one tech category being process automation.
There is a void in corporate banking technology and innovation
Even so, there are shortcoming in corporate banking technology and innovation. Even as more banks turn to tech partners, they tend to stick with a select few partners whose core systems perform the basics of running the bank. They then have to buy into that technology provider’s ecosystem of value added apps and add-ons.
This creates a dilemma for banks: if banks can run the same core and add-ons, how will they distinguish themselves from other banks using the same products? As a result, pure innovation can be very challenging for banks.
COVID-19 has accelerated the shift to electronic payment acceptance…
The emergence of the COVID-19 pandemic changed how businesses function, with treasury commercial clients moving away from cash and checks and toward electronic payment acceptance at a rapid rate. What was once referred to as electronic bill presentment and payment (EBPP) has now evolved into a broader concept of becoming a core component of integrated receivables.
“With how businesses are operating under COVID-19 restrictions, many of these banks’ commercial treasury clients are no longer accepting cash or checks and are quickly migrating to electronic payment acceptance,” explained Goldthwaite.
…Presenting a unique opportunity for banks
While these clients may have fintech options to help with digitizing payment processing, this presents a great opportunity for banks to step in and offer enhanced payment processing services that are fully integrated with the bank’s systems.
Banks have a unique advantage to provide these value-added integrated receivables to their solutions to clients over a startup or fintech with limited banking experience.
How DirectBiller enables banks to better serve their clients
One way banks can approach this opportunity is incorporating Aliaswire’s DirectBiller into their systems to deliver unique value propositions to their clients.
DirectBiller enhances the bank’s core value by adding advanced, white-labeled integrated receivable solutions that are fully integrated with their core systems. “We partner with banks large and small and help them roll out these advanced payment solutions to their treasury clients,” said Goldthwaite. “From simple one-time payments up to automatic recurring payments with full invoice PDF presentment, we help banks deliver a highly configurable solution to meet the needs of their clients.”
The flexibility of DirectBiller enables Aliaswire’s bank partners to provide uniquely configured solutions for multiple vertical markets, such as healthcare, property management, education, insurance, government/municipalities, utilities, and B2B.
While each solution can be uniquely configured, the core platform and processes are identical, making it very saleable and scalable for the treasury management services sales team.
Putting the tech in fintech
“As a payments technology provider to the financial services industry, we always say that Aliaswire puts the tech in fintech,” said Goldthwaite. Aliaswire recognizes the value that banks bring to the market: strong balance sheets, deep customer relationships, comprehensive risk management, and strict controls of oversight to help their treasury clients manage and secure their money.
“Our bank channel partners are able to leverage our award winning and patented technologies to expand their banking solutions and build deeper relationships with their key commercial clients. Aliaswire helps banks, and helps billers, to get a much bigger share of electronic payment processing,” he concluded.