Strategic Distribution Partnerships for SaaS in the Fintech era

In today's dynamic business landscape, the way we approach distribution partnerships has undergone a significant transformation. As someone who has spent over two decades building and scaling partnerships worth over $300M across traditional financial institutions, big tech, and fintech disruptors, I've witnessed firsthand the shift from simple channel relationships to complex ecosystem plays that blend distribution with capability enhancement.

The Partnership Paradigm Shift

Gone are the days when companies like QuickBooks, Xero, and Sage merely leveraged third-party channels to reach more customers. Today's most successful partnerships combine distribution reach with functional capabilities, creating value for end customers that neither party could deliver alone. During my time as Fintech International Segment Leader at QuickBooks, I led a key international marketplace strategy project that demonstrated this evolution perfectly. Our partnerships with PayPal and GoCardless weren't just about distribution; they fundamentally enhanced our product offering by seamlessly integrating payment processing and direct debit automation into our accounting platform. The continuous challenge and opportunity were to make this delightful for customers and as frictionless as possible.

3 Partnership Archetypes

Based on my experience scaling partnerships across Intuit QuickBooks , Lloyds Bank , and Barclaycard Payments (while they were still fully owned by Barclays UK ), I've identified three distinct archetypes that SaaS companies should consider:

1. Pure Distribution Partners: These are software-only distributors like Microsoft AppSource, Salesforce AppExchange, or specialised vertical marketplaces. They provide reach but don't enhance product functionality. For SaaS providers, this is about ensuring your solution is available as a pre-selected, pre-integrated, or pre-bundled offering from the distribution partner. This depends on the size, industry, and types of businesses you are targeting, and the relative balance of power in this partnership.

2. Capability-Enhancing Distribution Partners: This is where fintech partners can truly shine! Partners like PayPal (payment processing), GoCardless (recurring payments, subscriptions via direct debit type functionality), or Stripe (online payments) distribute your solution while simultaneously enhancing its core value proposition. These partnerships can deliver significant accretive benefits to your top line based on the underlying partner (referral) economics you negotiate based on your market share and presence, and can fundamentally lead to greater stickiness for both parties because they solve real customer pain points.

3. Hybrid Ecosystem Partners: The most sophisticated partnerships combine multiple elements. During my tenure at Barclays, our vision for a global partnership with a leading GDS (e.g. like a Sabre Corporation or Amadeus) included both global distribution and comprehensive FX capabilities, creating a full-stack solution for international e-commerce for the Travel & Entertainment corporate sector. These are complex, massive deals and can often feel like you are moving mountains when you are negotiating across enormous organisations but well worth the effort when the organisations can row in unison!

Strategic Evaluation Framework

When evaluating potential distribution partners, SaaS companies should apply a multi-dimensional assessment:

• Portfolio Approach: Diversify across all three archetypes. Pure software distributors provide broad reach, fintech partners enhance functionality, and traditional channels offer market credibility. As a SaaS provider, you will need to take stock of what mix gets you the right mix of reach, economics, and truly compelling and differentiated value proposition. When you are looking purely at reach, look at the target verticals of the customers you are trying to reach by industry, and the complimentary products those customers use beyond your own. More often than not those counterparties may be looking to someone with your capability to partner with!

• Capability Gap Analysis: Identify where your product roadmap has gaps that the partners could fill. Our work learning about and speaking with Payment Institution Service Providers (PISPs) like Plaid, Ecospend, a Trustly Company (now Trustly), Modulr, TrueLayer, and Yapily (amongst many others) at QuickBooks gave us a much better understanding of open banking capabilities that we wouldn't develop in-house.

• Geographic and Regulatory Considerations: Different markets require different partnership strategies. My experience during early stages of options for Barclaycard to meet Visa Commitments to the EU Commission DE back in 2014 meant we were to secure an Irish Payment Institution (PI) license application from the Central Bank of Ireland. The options we navigated in the face of an under 6-month deadline taught me that regulatory complexity often makes it critical to go back and examine what you have in house. An existing local entity in your stable (which we opted for) may prove a far quicker route to market than securing a local in-market license. In other instances where we didn’t support local payment methods, local fintech partnerships or entities were essential for European expansion.

The Fintech vs Non-Fintech Decision

The choice between fintech and non-fintech distribution partners isn't binary. It is strategic. Fintech partners excel when:

• Your core product has adjacent financial services needs (e.g. Hospitality, Invoicing)

• Customer experience can be enhanced through seamless integration (think truly embedded finance)

• Regulatory compliance requires specialised expertise (this can also mean requirements for deep sector knowledge)

Non-fintech partners are optimal when:

• You need broad market reach across multiple verticals (think geographic)

• Your solution requires minimal technical integration

• Brand association with established players adds credibility (think Big 4 accounting or their smaller counterparts when you are a SaaS moving up market, software firms like Expensify if you are seeking to automate expense tracking and reporting, QuickBooks' partnerships with West Ham United FC to leverage high-profile brand)

Measuring Partnership Success

Traditional partnership metrics focus heavily on revenue attribution, but capability-enhancing partnerships that also boost reach require broader measurement. Across organisations I’ve worked in or with, we achieved a 20-25% increase in lead generation across enterprise, mid-market, and SMBs by focusing on:

• Customer Lifetime Value (LTV) improvement: Partners who enhance product functionality typically increase customer retention

• Customer Acquisition Cost (CAC) reduction: Integrated solutions often have much higher conversion rates avoiding the need for expensive paid media campaigns

• Product Adoption Metrics: Measure how partnership-enabled features drive engagement driving up overall appeal of your product net promoter score (NPS).

The Future of Partnership Strategy

The most successful SaaS companies are moving toward ecosystem thinking rather than simple distribution. This means:

• Building API-first architectures that enable deep integrations

• Developing partner success programs that go beyond traditional channel management

• Creating feedback loops where partner insights drive product development

At QuickBooks, scaling our international matrix team wasn't just about managing more channels or partnerships - it was about building the organisational capability to orchestrate complex ecosystem plays across multiple geographies.

Key Takeaways for SaaS Leaders

1. Embrace the spectrum: Your partnership portfolio should span pure distribution, capability enhancement, and hybrid models.

2. Think ecosystem, not channel: The best partnerships create value that extends beyond simple customer acquisition.

3. Invest in integration: Technical integration capabilities are becoming a competitive differentiator.

4. Measure holistically: Success metrics should reflect both distribution and capability enhancement value.

5. Build for scale: Organisational capability in partnership management is as important as individual partner relationships.

The distribution partnership landscape will continue evolving as SaaS, fintech, and traditional players converge. Companies that approach partnerships strategically, viewing them as ecosystem plays rather than simple distribution channels, will capture the most value in this transformation.

What's your experience with capability-driven partnerships? Have you seen similar evolution in your industry? I'd love to hear your perspective in the comments!