In a Nutshell: When choosing a banking partner, fintechs and brands don’t have to settle for a purely custodial relationship. But building a partnership that can add impetus to corporate goals requires a thorough analysis of the possibilities and opportunities both sides bring to the table. Experience on the banking side counts, say executives at nbkc bank, nationally known as a sponsor of FDIC-insured checking, savings, and FBO accounts and white-label debit cards for select fintech partners. Equally important is the capacity for creative thinking to drive innovation and a future-focused strategy for sustainable success.
There’s a lot at stake in the world of fintechs and brands today. Digital transformation promised that technological barriers would no longer prevent consumers from vetting new business approaches in financial services. But removing barriers doesn’t insulate companies from competition and the need to continually innovate to stay ahead of the curve and survive over the long term.
If anything, tech dynamism makes the modern marketplace more perilous than the legacy environment of a generation ago.
Everybody’s playing the same game on the same field, so fintechs and brands in all categories that want to live to compete another day need to pay microscopic attention to every detail. When even a single decision, relationship, or partnership doesn’t move the ball forward, the other team potentially wins.
That said, how companies go about dotting every i and crossing every t is a matter of personal choice: You can go it alone or bring in other folks to help.
Partnership productivity is the mantra at nbkc bank, which marshals two decades of experience in compliance, financial services, and security to help select fintechs and brands of all sizes reach their goals. As a nationally known BaaS (banking as a service) collaborator, nbkc argues that productive partnerships help everybody win.
“We have a lot of goals in working with our partners, including improving the customer experience and enhancing back office efficiency,” said Eric Garretson, Chief Financial Officer at nbkc. With Melissa Eggleston, Chief Deposit Officer, Garretson is among the nbkc staffers charged initially with reaching out to fintechs starting in 2017.
“We maintain a team that surrounds our partners, including operations staff, risk management staff, and relationship managers to ensure our partners have what they need,” Eggleston said. “We’ve built a business around that strategy.”
A Team Approach to Partner Relationships
Technology has always been a focus at nbkc bank, a Kansas City-based institution that started about 25 years ago as an online mortgage lender. But in the 1990s, “technology” meant faxes and overnight mail packages, not the streamlined communications systems of today.
Still, those years were the beginning of the modern fintech industry. nbkc bank needed a focus on innovation to match its technology emphasis to continue progressing. It saw an opportunity to raise low-cost deposits by partnering with non-bank technology companies, which posed a significant competitive challenge to traditional banks.
Now nbkc powers 10 Banking as a Service (BaaS) partners — not only fintechs providing banking services but also robo-advisors, payroll service providers, billing companies, and round-up savings firms. It even works with a Fortune 100 company.
“We found that we’re really good at providing banking expertise, including compliance and risk management oversight,” Eggleston said. “And we really know what it looks like to serve customers.”
nbkc’s initial approach to customer service in reaching out to this new category looked different than it does today. It evolved a dedicated team to manage BaaS partner relationships as it gained industry and organizational expertise, moving beyond its startup phase to a more formal team approach.
“At the beginning, everybody was a jack of all trades, trying to figure out how to bring products to market,” Eggleston said. “It looks different five years later.”
At the same time, the bank has explicitly chosen not to judge its success solely on its number of BaaS partners. Instead, it concentrates on finding the right fits in terms of industry niche and market prospects so both the partner and nbkc prosper.
“An important point for us is we started slow,” Garretson said. “Very early on, we decided to have select clients and not attempt to be everything for everybody.”
Helping Partners Accomplish Banking-Related Goals
Working with select clients ensures they all receive a bespoke service they can count on. While some BaaS providers, with more clients than they perhaps can handle, struggle with compliance, nbkc has completed two FDIC exams without significant issues.
“We feel we have a great program,” Garretson said. “That includes efficient communication with our regulators and vendor management, including onboarding.”
A substantial internal development team builds nbkc’s software and tools. Eggleston’s division has access to an engineering team of about 15 individuals to transform nbkc’s aspirations into measurables.
“We want to be as cutting edge as possible and try to bring our visions to life,” Eggleston said. “We work as quickly as possible with our development team to bring ideas forward.”
The emphasis on partners extends to third-party providers such as Helix, which supplies the core banking platform that nbkc leverages. nbkc and Helix work together to bring banking products to life for nbkc’s fintech partners, including access to early direct deposit and provisioning digital wallets. The core banking platform allows nbkc partners to make API calls and grow at scale.
nbkc’s fintechs don’t only interact with Helix. Instead, nbkc works closely with Helix and the fintech in a tri-party relationship.
“We want to make sure that we have clear lines of communication,” Garretson said.
nbkc entered the BaaS marketplace aware of the notion that banks and fintechs were naturally at odds and competed for the same customers. Eggleston said the bank has not found that to be the case.
“They all serve and provide value to different customer bases,” she said. “Most are direct to consumer offering a checking or savings account, but working with us has been a way to add value for their customers.”
Pushing the Innovation Envelope to Advance the Industry
One thing nbkc partners have in common, however, is a relentless approach to innovation. That’s where the bank comes to the fore as an active partner able to contribute positively to the relationship.
In each highly competitive niche in which nbkc operates, entrepreneurs strive to stay ahead of the curve in meeting and exceeding customer expectations. Consolidation and change are constants in this environment, sometimes leading nbkc partners to exit the relationship.
“What makes them such visionaries in this space is that although they’re all technologists, they’re creatives as well, trying to bring a unique, non-bank-like experience to their customers,” Eggleston said. “That helps us push the envelope beyond traditional banking.”
That means the bank has regular conversations with partners, constantly discussing roadmaps and next steps. Those ongoing relationship conversations make the nbkc approach unique: partners can pick up the phone with ideas and brainstorming requests and have impromptu discussions around moving the needle forward.
Notwithstanding the dynamism of the industry, nbkc measures success through customer retention and contract renewal. The team prides itself on taking good care of its clients.
“They can decide at any time if they want to make a different choice, but we’ve had amazing retention and direct relationships with our partners,” Eggleston said.
Meanwhile, the bank continues prioritizing internal innovation, exploring expanding its BaaS service offering to categories such as Payments as a Service and Business Banking as a Service. It may expand through internal development or acquisition to fill additional niches.
“We think a natural evolution is to start offering other verticals: Payments as a Service, Lending as a Service, Mortgage as a Service,” Garretson said. “As our partners mature, build out their roadmaps, and add new solutions, we’re well positioned to take those things on when the timing is right.”