How to build successful banking partnerships in the US payments landscape: 3 key takeaways
Last week's webinar on building successful banking partnerships in the US payments landscape highlighted some crucial compliance considerations for financial institutions navigating this rapidly evolving ecosystem.
With the US FinTech market representing around half of the global total and banking as a service (Baas) poised for significant growth, effective partnerships that leverage compliance for growth are more critical than ever.
Here are my top 3 takeaways:
1. Ensuring proactive compliance from day one
With no leeway on offer from US regulators, both partners must be prepared to demonstrate compliance from day one. For FinTechs, this means integrating AML compliance as a core element of their business strategy, not as an afterthought or box-checking exercise, so compliance doesn’t cause friction further down the line. Banks, on the other hand, must conduct rigorous due diligence, understanding that their FinTech partners represent an extension of their own operations.
2. Bridging the cultural divide between banks and FinTechs
The most successful partnerships involve banks and FinTechs leveraging each other’s strengths for mutual benefit, rather than letting their cultural and operational differences get in the way. Capitalizing on FinTechs’ product-led mindset without compromising on banks’ comprehensive risk management frameworks is crucial. For a successful, long-term partnership, both parties must understand each other's priorities and operational realities. This involves aligning on governance structures, documenting compliance policies and procedures, and a shared recognition that the FinTech's customer is ultimately also the bank's customer.
3. Real-time payments demand real-time risk detection
The shift towards real-time payments, which includes the increasing popularity of digital assets like stablecoins, introduces new complexities around financial crime risk. Unlike traditional payment rails, instant payments lack hold periods – an evolution that benefits consumers but can make tracing and recovering illicit funds harder. This means financial institutions must take a proactive approach to risk mitigation. Adopting AI for real-time transaction monitoring allows firms to process payments quickly and safely, while information-sharing initiatives could be useful for both banks and FinTechs.
Click the link below to watch the full session on-demand: