Financial Services and Fintech Partnership Series
Maintaining advantage in an increasingly complex and interdependent finance and fintech ecosystem
If the recent market success of companies like Plaid and Stripe tells us one thing, it is that the financial services and fintech ecosystems will, in the coming decade, become increasingly complex, interconnected, and interdependent. Effective third-party collaboration and partnering will no longer be a competitive advantage, but an operational necessity.
Players who resist this change and/or fail to proactively plan for this increasing interdependence will struggle to meet the changing needs of consumers, and fall behind more nimble competitors.
Meanwhile, those organizations who are able to form and nurture key partner and vendor relationships are likely to spot and adapt to market changes more rapidly and easily.
In this series, we talk about opportunities and challenges organizations face across the partnering lifecycle: from deciding whether, and if so how, to partner; to launching and managing individual partnerships; and to partnership portfolio management.
Partnerships can be complicated to execute, and frequently carry some form of meaningful competitive risk (i.e., disintermediation, replication of IP). And, at the same time, they can often accelerate time to market, increase market share, and/or make the difference between success or failure. Unfortunately, the combination of definitive risk and uncertain benefit means they are often overlooked or discounted (in risk-averse organizations) or overutilized (in risk-loving organizations).
Companies with mature partnering capabilities take a disciplined approach to determining whether, and if so how, to partner by asking the following questions:
Which needs in our customer’s value chain are we focused on addressing?
Where are we currently unable to fully address those needs on our own and why?
How should we close our capability gap? Should we build our own capability? Acquire it? Partner with a third-party?
What are the best ways for our end-customers to consume our solutions?
Making Build/Buy/Partner Decisions
Partnership selection, negotiation, and launch negotiations
Once an organization has decided that a partnership is the best path forward, it must compare potential partners, identify the best fit, and negotiate an agreement with implementation in mind. Organizations that do this effectively understand how to approach persuasion as an opportunity for joint problem-solving, and skillfully maximize leverage and total value in every negotiation.
Comparing Potential Partners
Defining Joint Solutions
Any partnership or third-party relationship of significance requires collaboration between individuals within two or more organizations that have different strategies, structures, processes, capabilities, and cultures. In the financial services, fintech, and techfin markets where many collaborations involve massive, established companies with start-ups, these organizational differences can be both a source of opportunity, and a contributor to failure. Mature partnering organizations follow a few simple rules for making alliances work, and even identify opportunities to leverage partnering know-how to enhance collaboration with more transactional supplier relationships.
Making Partnerships Work
Even the most successful product, sales, or technology partnerships can live out their lifespans. Because partners are rarely in complete agreement about whether (or how) to sunset a relationship or transform it, these situations often present their own unique challenges.