Few industries are experiencing growth at the breakneck speed of the Fintech sector. Fintech is on track to reach a staggering $1.5 trillion global net worth by 2030 according to The Boston Consulting Group. The reason? Innovation is happening rapidly and constantly. Accordingly, many fintech players are leveraging the power of collaborations and financial partnerships to fuel expansion and drive reach — and profits.
Partnerships aren’t a new phenomenon in the finance world, of course. The world’s big financial institutions can all trace their lineage back to small, local banks acquired generations ago. But the formal affiliations are different now for financial entities because they’re not just banks joining with banks. Now, it’s becoming popular for financial organizations to join forces with fintech startups. The ultimate goal of these alliances is to reap a wide array of benefits.
Two such advantages of financial partnerships include more exposure for the fintech disruptor and a major differentiator for the financial institution. Essentially, the fintech provider brings transformative products and services into the mix. The financial institution brings name recognition and access to large swaths of customers. In this way, both partners’ interests are served, as well as those of their respective target audiences.
3 Financial Partnerships to Note
If you’re not familiar with all the financial partnerships taking place, you may be surprised at some of the following. They represent some of the most exciting collaborative setups to watch.
1. TransUnion and Truework: Giving people more control of their private information
TransUnion is a trusted, household name. The international company regularly invests in select up-and-coming businesses that fit its consumer stewardship business model. Like other credit bureaus, TransUnion is constantly taking steps forward to help consumers protect their private information. According to the Federal Trade Commission’s reporting, identity theft accusations rose to more than 1.4 million in 2021. This figure illustrates how widespread the problem is.
Despite concerns about fraud, people still rely on their credit scores and other verifying information though. They can’t just “opt-out” of being able to share their personal data. With this in mind, TransUnion has entered into an agreement with income verification platform Truework. This commercial partnership sets up a safer method for individuals to allow lenders to get a transparent look at their information. At the same time, it gives both entities the ability to see consumers’ credit and work histories in one place. Both parties hope this clearer, more well-rounded picture promotes more inclusive credit decisions.
One of the use cases for the TransUnion-Truework partnership is in lending. Landlords and lenders will be able to accelerate their decisions thanks to quicker access to credit information and verified income data. TransUnion will be able to offer more one-stop, single-platform services to its individual and commercial customers.
2. Argo and Trisura: Improving surety opportunities and experiences
The construction industry is ripe for overhauls in many ways. In addition to a massive labor shortage and supply chain snags, competition is fierce. Historically, surety bonds have helped many small contractors keep up and win bids. Yet finding the right surety insurance vehicle can be tough. For years, Argo has been a niche insurance provider with surety roots. Nevertheless, Argo has seen a need for more novel, streamlined surety options.
To serve the surety needs of modern contractors and construction businesses, Argo recently announced an alliance with Trisura. A rising fintech, Trisura has concentrated on making the surety approval process less complicated and more positive. Like Argo, Trisura has cultivated its focus on driving valuable, trusting partnerships. Trisura will take on underwriting duties and Argo will handle core managerial ones.
The achievement illustrated by this particular partnership is the evolution of both organizations.
Since each party can do what it does best, end users are better served. In an ecosystem where customer service can be a client loyalty game-changer, the arrangement makes sense.
3. Stearns Bank and Sardine: Preventing fraudulent activity in finance
More people are doing their banking online and sharing personal data to ensure they can get and send money faster. The only problem? In a desire to speed everything up, organizations and platforms may put customers at risk of fraud.
To safeguard its banking customers, Stearns Bank is collaborating with Sardine. The objective is to leverage fintech Sardine’s success in risk management to enhance safety measures. Once the relationship is in place, Stearns Bank plans to begin devoting more time to technological disruption.
From the outside, this “joined forces” may look like just a fintech providing services to a bank. However, the hope is that the relationship serves as more of an equal partnership, not an outsourced business transaction. After all, both organizations want to grow in the compliance and risk management realms. Together, they may be able to innovate more quickly.
As more entrants gain traction in the fintech marketplace, more collaborative efforts and financial partnerships will blossom. This isn’t just good for the partners, though. Relationships like the ones mentioned above could make engaging with financial companies easier, safer, and more convenient for all.