In the field of ag lending — and any ag-adjacent business — producers have a reputation for loyalty, particularly when the lender is a reliable source of guidance and has shown a willingness to meet their needs through a personalized approach. But keeping loyalty takes a special mindset that every encounter with a customer is an opportunity to earn or maintain that loyalty, regardless of the number of years they’ve been borrowers and account holders. That’s where going all in on fintech provides lenders an opportunity to bolster trust with ag lenders.
As lending startups make it easier and faster for producers to take out loans, price insurance and manage other areas of their finances, brick-and-mortar lenders might consider partnerships with fintech companies to create a win-win-win situation:
- The fintech company gains access to a customer base.
- The bank can modernize services and operations without having to reinvent the wheel.
- Customers get the best of both worlds: cutting-edge tech tools backed by top-notch customer service.
Despite their reputation for tradition, anyone who spends time with farmers, ranchers and growers knows they’re quick to adapt to tech solutions. Even if it’s not their preference, if the new way saves time, reduces inputs and boosts margins, they’re all in. When they independently download a new financial app, they’re hoping to spend less time in the office and reduce expenses.
Where fintech can benefit from a banking partnership
Despite the appeal and promise of technology, some fintech startups are having big problems getting a handle on customer service. They lack the infrastructure, perhaps because they fail to appreciate that chatbots have limits when it comes to the urgent and complex issues around money, according to Kiplinger. Another issue they’re increasingly facing is “fee” creep. After offering free and low-cost services to set themselves apart from traditional banks, these fintech firms eventually raise prices.
In these scenarios, fintech — the disruptor — becomes disruptive to the very customers that are counting on it to make their lives easier. So as your ag customers search for tech-forward solutions, understanding the important role lenders like you can play in the expansion of fintech can put you in the right place at the right time.
How fintech firms find solutions with partnerships
While fintech firms are lacking in customer service, traditional lenders can be understandably reluctant to build the technology in-house.
And that’s where banks can join forces with fintechs. Because fintechs need charters to operate, partnering with banks gives these startups a way around the regulatory hurdles of launching new services.
What fintechs do is “rent” the compliance or regulatory function of a traditional bank, so they can get to market more quickly. Bank partnerships give them a place to hold deposits with FDIC-insured protection. The bank gets access to tech-forward products minus the expense and headaches of creating the technology in-house. That’s a win-win.
How are fintech-lender partnerships structured?
The Federal Reserve Bank of St. Louis identified three types of fintech-lender partnerships.
1. Operational technology partnership
How it works: The bank adopts fintech technology to streamline its back-of-house processes and monitoring. Some can also help with fraud detection and authenticating customers.
Benefits: The partner bank can reduce operational costs by reducing errors and improving efficiencies.
2. Customer-oriented partnership
How it works: Fintech partnership improves consumer-facing banking functions, such as online banking (opening accounts and making deposits) as well as person-to-person payments.
Benefits: The partner bank can extend its territory, allowing it to serve more customers without the need to open new locations. Some partnerships have enabled partner banks to launch teller video chats, so customers can complete their business outside of branch operating hours.
3. Front-end fintech partnership
How it works: Sometimes called Banking-as-a-Service (BaaS), the fintech firm interacts directly with customers, for deposits, loans and other banking needs.
Benefits: The fintech may achieve a wider reach of customers while avoiding some of the hazards inexperienced startups can face, such as customer service mishaps and compliance oversights and errors.
Clinching the service differentiation
Finding a fintech partner takes due diligence on the part of the bank. It’s not enough to offer the latest and greatest financial tools if your partner isn’t aligned on core values, such as a commitment to excellence in customer experience. After all, you can’t deliver on speed and convenience when you’re constantly derailed by errors.
That said, partnering with the right fintech partner puts the tools in the hands of ag customers in search of smart solutions that streamline their day. By continuously evolving your services to meet modern needs, and preserving access to helpful, friendly service, the partnership bolsters customer loyalty.
Agri-Access accelerates your lending power
At Agri-Access, our focus is on upping the lending power of community banks, allowing producers more opportunity for expansion and growth. At the same time, we help our community banking partners move faster and increase their flexibility.
Our Scorecard program guarantees a quick turnaround on decisions regarding loans up to $4 million. Our loan operation teams work with a suite of sophisticated digital tools to collect and process information quickly and remotely, while you remain the lender of record and your customers remain loyal to you.
Reach out to a relationship manager today to learn more about how Agri-Access can keep you innovating in this evolving world of fintech solutions.