5 factors for a successful pay later solution

These conditions need to be clarified in advance
2 min
Verena Mai

Banks and fintechs – a combination that seemed impossible for years. But today’s look at the multitude of successful collaborations between traditional and new players shows us otherwise: A cooperation between established banks and emerging fintechs does exist. 

Both sides bring strong advantages to the table. Fintech companies clearly score points with their agile structures, exceptionally well-developed technologies, massive know-how and speed in developing new products and bringing them to market. Banks, on the other hand, bring a very different competitive advantage: brand, trust & legitimacy. They have a strong customer trust built over generations and consequently a large customer base. Fintechs and banks can therefore benefit immensely from each other.

However, in our experience, 5 prerequisites must be clarified in advance before the collaboration to develop and launch a successful BNPL solution begins.

1. The Memorandum of Understanding

It is advisable to draw up a Memorandum of Understanding (MoU) at the very beginning of the cooperation between the bank and fintech. The MoU serves to define the responsibilities and financial framework of both cooperation partners. This provides the necessary transparency and structure during the entire project. In addition, we agree on a roadmap with the individual milestones until the launch of the product, possible exit options, confidentiality and licensing agreements. It is important that the product team, the risk team as well as the board of directors are involved as decision makers during the preparation phase. 

2. The Commitment

Through our successful cooperation with VW Bank and Raiffeisen Bank International, we have learned that top-management must be aware of the importance of the project and have the will to see it through. This commitment is essential even before the start of the actual project. If the top management level is not completely behind the project, the cooperation is very likely to fail.

3. The coordination of the project

From the outset, one person in the bank‘s team should be appointed as project lead. People from the following departments qualify especially well for this role: the product department, business development or the executive department of the Board of Managing Directors. „Someone who has access to all departments and has know-how in several areas is perfect for us,“ says Credi2 CEO Daniel Strieder. “An IT background would be ideal.”

4. A professional project plan

The purpose of a professional project plan is to record the responsibilities, the scope of the project, and the resources required. Additionally, it must be specified who will lead the project on each side – the bank’s and the fintech’s in order to maintain clear structures and minimize room for misunderstandings.

5. The Kick-Off meeting

In one or more meetings, all stakeholders gather to gain the necessary understanding of the project: “It is important that the departments see us as an additional resource and reinforcement so that we can develop and implement the product together,” says Daniel Strieder. Under no circumstances should the fintech be seen as a competitor to the bank, but rather as an equal partner in order to launch an innovative, new financial product in the best possible way.