On November 6, 2018, DWT’s Project W hosted the third FinTech Women event of the year, featuring a panel discussion titled “State of the FinTech Ecosystem: the FI Perspective.” The panelists represented a wide cross-section of financial institutions engaged in the FinTech ecosystem, including a large national bank, a growing community bank and one of the largest credit unions in the country. Panelists included:
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Julie Pukas, Head of Commercial Product Integration and Merchant Solutions, TD Bank
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Nadia Dombrowski, Senior Vice President, General Counsel and Corporate Secretary, Community Federal Savings Bank
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Brittani Ivey, Associate General Counsel, Navy Federal Credit Union
Allison May, a partner in DWT’s DC office and FinTech Women co-chair, moderated the panel.
Attendees received candid insights into how financials institutions are thinking about serving and partnering with FinTechs in the rapidly evolving technological and regulatory environment. Key takeaways from the discussion include:
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FIs and FinTechs benefit from finding the right alignment of needs and services. An FI’s structure, ownership and risk appetite influence how an FI approaches the FinTech ecosystem generally and serving and partnering with FinTechs specifically. For example, as a growth-focused, privately owned community bank, CFSB is well positioned to support young FinTechs. A large national bank like TD often partners with more mature FinTechs to fit specific needs, while NFCU’s member-owned structure means it is likely to pursue many of its FinTech partnerships based on member feedback.
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FI-FinTech relationships reflect increasing complexity and maturity. As FinTechs mature, they are engaging their own vendors. When a FinTech has direct relationships with one or more sub-vendors, that can present risk for an FI that likely has compliance obligations related to these sub-vendors. FIs and FinTechs must work together to effectively manage these relationships.
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FIs are focusing on APIs. FIs want “plug and play” FinTech partners who can quickly and easily integrate with the FI’s technology. FIs are investing in developing APIs and want partners who can and will leverage the FI’s technology.
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FI-FinTech partnerships continue to evolve. As FIs become more technologically advanced, they are looking to FinTechs to help develop FinTech products and services before the FI brings the technology in house. FIs also want partners who are nimble and prepared to iterate.
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RegTech continues to wield increased influence. FIs are taking note of the rapid growth of RegTech—FinTech solutions that aren’t customer facing but that help FIs fulfill their compliance obligations. RegTech that can accommodate both the FI’s holistic systems as well as product-specific obligations are most appealing for FIs right now.
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Among the most important takeaways — FIs want FinTechs’ help in deepening and broadening customer relationships. FIs want to know that a potential FinTech partner understands both the FI’s business and customers and the FI’s regulatory obligations.
