Keep Lending Local: The Benefits of Partnering with a Mission-Driven FinTech

Explore how aligning with mission-driven FinTechs can help community banks and credit unions achieve their strategic goals and better serve their communities.

July 3, 2024
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When community lenders think about what kind of FinTech to partner with, it's common to focus on outcomes, functionality, features, cost, and strategy. Whatever FinTech you work with will have advanced innovation and technology to improve your workflows; that’s the baseline for investment. But it’s also important to consider the missions, values, and beliefs of a FinTech. Oftentimes, a FinTech’s mission can directly align to the outcomes and features a lender is looking for—as long as the mission statements match up.

In reality, community lenders need to partner with FinTechs who share common missions and values as well as provide valuable offerings. It’s not enough for a FinTech to only be innovative and forward-thinking (although those things are important too). A FinTech must also directly contribute to your overarching mission and vision to ensure their solutions can actually help you achieve your own. A FinTech aligned to your mission and long-term goals will bring the institution and its members far better results—and at greater scale. 

In this blog, we explore why a FinTech’s mission matters and why community lenders should keep lending local based on four key values:

  1. Financial inclusion
  2. Culture of compliance
  3. Fostering innovation
  4. Long-term partnerships

Financial Inclusion to Underserved Communities

According to Harvard Business Review, major FinTech executives have been promising to expand financial inclusion to the unbanked. HBR has been working diligently to understand exactly how well larger FinTechs are adhering to that promise—with mixed results.

Smaller community lenders have a much stronger potential to support underserved communities. For example, a community lender can much more easily and readily provide smaller loans to folks with lower credit scores, geographic barriers, limited income, and immigration status that might typically get left behind. Community lenders can fill the void that major entities leave thanks to the right technology and partnerships.

FinTechs can help smaller lenders service folks for better financial inclusion. Technology from these partners can empower lenders to get money in the borrowers’ hands faster with more transparency, and the lender can cycle through more loans quicker. FinTechs that have similar mission-driven values to yours will ensure their technology solutions can easily manage the faster, smaller loan cycle. 

A Culture of Compliance

Four out of five of the top 100 banks have partnered with at least one FinTech company. FinTechs have long promised to help banks and lenders access new markets, enhance and accelerate the rollout of digital product offerings, and deliver a more customer-friendly experience. But none of that really matters without the right compliance and regulations in mind.

FinTechs that are focused on smaller community lenders also focus on the regulations most relevant to the specific size and niche, with the flexibility to adapt to the evolving market. A responsible, mission-driven FinTech company recognizes the inherent risks of the market and proactively works to ensure their offerings are in compliance with the security standards and consumer privacy protections that financial institutions require. While a FinTech may not be able to give you guidance or advice on maintaining compliance, they design products with requirements in mind and can help you customize the product to align to your unique lending process. 

Fostering the Right Innovations

Most lenders, whether they are banks or credit unions, have mission statements and goals around serving the community. Although profit might be on their minds, they operate and run their institution based on what’s best for the folks that live in the area. Especially if the lender is based on a particularly hazardous area or serving more marginalized folks, it will be striving for innovation that best suits ways that empower and enable their communities to be financially successful.

The best partnerships with a FinTech are forged around deliberate and strategic goals like these. If a FinTech and a community lender have differing missions and value-sets, the offerings won’t be as strategically useful or valuable. But if the FinTech has a similar, community-driven mission statement, then it's much more likely that the capabilities will align to what you need most to meet your goals. For example, a solution may provide automation that more quickly gives you insight into which loans to approve, thereby getting borrowers’ their loans faster.

Long-Term Partnerships, Not One-off Transactions

Investing in FinTech technology should never be only about gaining access to a feature-set. Especially with the rate of digital transformation and technological change, your technology partners should be with you for the long haul. And if their mission doesn’t align to your community-driven passions, you won’t see the true value over time. True long-term partners are likely to iterate and deliver value over time as your strategic insights change, and the best FinTech partners will help you work towards that goal.

Keep Lending Local with Community-Driven Missions

By harnessing the power of FinTechs, community banks and credit unions will put themselves in a much stronger growth position while increasing customer loyalty. Coviance empowers community banks and credit unions to scale their home equity loan programs without adding staff, while improving compliance and building borrower loyalty with efficiency and personalized service. Our community-driven mission aligns with community lenders, ensuring our solutions match your biggest strategic goals.

For more information about our own Mission and Values, visit our About Us page.

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