Seven Sins of Fintechs When It Comes to Integrations

Integration is a buzzword among almost all technology providers today. Fintech doesn’t stand alone—integrations and partnerships play important roles in the success of all companies in disrupting this market.

We hear announcements about new partnerships every day; still, the successful launch of a partnership has a long and hard job behind it. We asked experts in Fintech to share the biggest pitfalls of integrating with other industry players. These seven sins discussed below are the most popular reasons for integration failures.

Overconfidence

Stephen Huppert

Stephen Huppert from Stephen Huppert Consulting feels sorrow about Fintechs not making as many partnerships as they can to grow their businesses and multiply opportunities to disrupt markets. The overconfidence about how much integration is too much leads them to being left behind by competitors who stay humble and search for partnerships with each other.

“Regarding Fintechs partnering together, this should be happening more, in my view. When I attend pitch events, I often find myself thinking that each business being presented contains a part of a good solution, and maybe a few coming together would be the road to success. This does not usually occur because the founders are convinced that their idea or approach is the best one.” — Stephen Huppert

Underestimation of effort needed

Adrian Johnstone

There’s no difficulty in building a one-way data transfer between Fintech. The other thing is building a full-fledged two-side integration of Fintech platforms. The underestimation of effort such implementation demands is fatal for companies. Usually, it results in a failure to enforce partnerships contract terms, among other things. Adrian Johnstone from PractiFi says that individual firms typically underestimate the effort required to design, build, and deploy a meaningful integration.

“[Fintechs] also overlook the need for ongoing evolution and maintenance. Tools such as Zapier give the impression that ‘integration’ is a point-and-click activity when tools of that ilk are really just posting data in a single direction. They have a place, but they don’t replace the value of genuine integrations.” — Adrian Johnstone

Elephants dancing with mice

Almost the same problem is experienced by startups that want to integrate with the mammoth companies with complex inner processes and slow adaptation to change. Large corporations and established companies cannot really understand the efforts that startups take to integrate with them:

“One of the main challenges I see with partnerships between Fintech startups and established financial services business is how to engage. Even with all the will in the world, the large, established businesses struggle to look at the relationship through the eyes of the startup. They don’t understand the cost of a drawn-out procurement or negotiation process. Often, they use processes designed for dealing with large technology providers such as IBM or Microsoft. In the end, it all becomes too hard. I have even seen cases of deals being signed but not implemented due to these challenges. It always reminds me of an elephant dancing with a mouse—even if the elephant loves the mouse, it cannot help but stand on it eventually.” — Stephen Huppert

Delays and dependencies

Tom White

According to Tom White from iQuantifi, delays in integration can have a direct effect on company revenues, especially when the third-party provider’s platform is integral to client acquisition or margin expansion.

“It is almost always preferable for integrations to be completed faster than planned. At the same time, the risk in integrating or partnering with another organization is having to work together on projects where there are dependencies on each other’s team that could affect work rate and time to completion. As an organization, we provide our internal resources with the capability to ramp up or scale down to account for changes in the work rate of the other party’s integration team.” — Tom White

The unstructured process

Corey Westphal

If both companies are willing to invest in the success of integration, the more positive the impact on a client’s workflow. Only one remark: to secure a mutually beneficial integration, both parts should work together to make the overall integration process structured. At least that’s what Corey Westphal from Mobile Assistant sees as partnership success:

“I believe the biggest problem with some integrations is how they are structured at the beginning of the partnership. Commitment to an integration design to benefit both partner companies is essential to ensure a positive impact.” — Corey Westphal

Calls, calls, calls

Mark Nahlovsky

Communication is important to make the integration a success. However, it’s rather difficult to establish clear and efficient communication between partners. Mark Nahlovsky from ActiFi is frustrated with the time that is wasted, leading to other participants of negotiations and requirements discovery calls not achieving the anticipated result from meetings:

“It [integration] is typically delayed by not having the right people on the initial phone calls to discuss the business purpose and the business process. In some cases, the business process is not being defined to a detailed enough level, thus forcing more meetings and leaving the software engineers frustrated that their time was wasted.” — Mark Nahlovsky

Different needs of partners

The last but not least sin of Fintech partnerships is unequal needs and expectations from an integration project. When they negotiate about an integration, both have different results in mind and thus can anticipate different processes and different effort levels. The most bitter thing is that humans may not understand that they expect different outcomes because their needs seem obvious for them but not to the other side.

“Don’t assume the client is going to tell the two vendors how to integrate in a manner that will be useful beyond the client’s specific use case. The client shouldn’t have to because they should be focused on their specific need. It is up to the vendors to design a solution that could be used in the future.” — Mark Nahlovsky

Forewarned, forearmed

The list of challenges you’ve just read isn’t complete; nevertheless, it can save you from bitter failures and remind you about the necessity of establishing clear processes and communications. Overall, collaboration among Fintechs is an area to be proud of. There’s a strong community that is able to accommodate each other, listen and hear the needs of the other side, and flourish together. There’s only a need to make a quick polish of the existing approach and beware of the seven sins that ruin successful integrations.