Industry observers estimate that there have been as many as 4,000 fintech start-ups since 2010 in the U.S. and the UK alone. These companies reside in all sectors of financial technology, from lending to payments and beyond. This surge in development has generated a lot of excitement in both the retail and the commercial space. It has also triggered a new wave of discussions in the area of vendor management practices, where regulators are starting to focus their attention. No doubt, your financial institution has considered utilizing new third party software for many different functions in the past two to three years. But the market is now evolving beyond software.
For all of the noise and press, fintech is only as valuable as the impact it can make on your key business objectives – mainly growth, revenue, customer service, and risk management. The world is changing and so is the idea of software as a service (SaaS). It is time to start asking your vendors if they can deliver “software as a strategy.”
At this point you are probably asking yourself, “What is the difference between software as a service and software as a strategy? Software as a service has been adequate up to this point. It is functional. It is utilitarian. It serves its purpose.
Software as a strategy, however, goes beyond the standard requirements of technology and expands your business horizons. In this new world, 1 + 1 adds up to much more than 2. Software as a strategy influences revenue opportunities. It reduces operational and credit risk. It opens new doors for your sales team.
When you find yourself evaluating a third party vendor, here are some questions to ask in order to determine whether you are looking simply at software, or something much, much more:
- Does the solution come with professional services that help my team grow revenue within the business unit?
- Does the solution come with a strategic plan for implementation and delivery of services? In other words, does it go beyond simple integration and training?
- Does the vendor offer tools to help amplify the effect of the software? In the lending environment, for example, these might include client-facing tools to help price and cost justify the solution.
- If the solution involves financial services, does it come with sales support as well as a marketing plan?
- Along the same lines as #4, does the vendor offer direct marketing resources?
- If the solution involves credit risk, does the vendor provide professional services to help mitigate and monitor that risk?
- Does the software simply fulfill an operational need, or does it help my staff to create a better client experience?
- Does the solution enhance communication between my team and my clients?
- Is the vendor passionately committed to continuous process and system improvement?
These are just a few of the criteria to consider. Any of us can vet a vendor to determine whether that vendor is financially stable and whether the software being offered meets the standards defined by the institution. But given the pace of change in the market today, it is time to raise the standards and demand a vendor that can stand by your side as a trusted partner that is invested in your success.
SaaS may get the job done, but it does not distinguish you from the market. Software as a strategy, on the other hand, improves your experience and the experiences of your clients. It leverages technology to enhance relationships. ProfitStars believes this is where the world of financial technology is going, and we can’t wait to meet you there.