As a small bank with $1.3 billion in assets, Radius Bank looks to technology firms to help build its virtual offering. These partnerships have always played a big role in the firm's expansion into new products. Beginning in 2013, the company announced various technology tie-ups with LevelUp, Prosper, and Aspiration.
“We've always said it's not fintech versus banks or friend versus foe,” said Chris Tremont, Radius' executive vice president of virtual banking. “We were intentional to use fintech for our channels.”
But over the past few years, the Boston-based bank has refined its partnership strategy, moving away from core providers in favor of newer fintech partnerships.
Getting the right fintech partner
Radius finds that working with startups can accelerate product development. For the firm's recently relaunched online and mobile banking solution, Radius chose Narmi
, an up and coming digital banking solution. Since going live at the end of October, the bank has already done as many app upgrades (3) as it had previously done in 18 months with its former provider.
Radius gets quicker turns using technology partners, but it finds it also has a stronger voice in determining what features eventually get rolled out. When working with larger core banking players, Radius felt that its voice sometimes got lost among competing roadmaps from the providers' numerous banking clients.
“Working with fintechs gives us a seat at the table to determine the look and feel of our offering and the features we want to provide our customers,” said Tremont. “We like the younger, nimbler companies.”
Radius also worked with Narmi to hone its marketplace concept. As a rule, Tremont says that Radius doesn't like to aggressively cross-sell. Instead, the bank prefers to focus on what it feels are its strongest attributes: strong deposit and banking products with good UI across all devices. To offer new products and services, Radius partners with fintech firms. For the 2018 relaunch of its online and mobile banking platform, Radius went live with integrations from Venmo (P2P payments), Billshark (lowering bills) and Lemonade (home and renters insurance).
Looking ahead to 2019
The Narmi launch was the completion of a two year technology roadmap. Looking ahead in 2019, Tremont says the bank will turn its sights on enhancing its business offering. Partnerships will play a big role in helping commercial customers with accounts receivable, invoices, and tax preparation.
“The next frontier is small business,” Tremont said. “They need financial management tools as much as consumers do. Small businesses haven't gotten enough attention in the digital space.”
The bank has thought a lot about how financial institutions interact with fintech firms. For Tremont, forging a good relationship isn't easy -- banks need to think creatively. For partnerships to succeed, he cites four requirements: having the right team, a cultural fit with fintech partners, strategic plans that line up between bank and fintech, and agreement on risk management.
Tremont sees an opportunity taking Radius' offering to fintech firms that want to offer an FDIC-insured bank account.
"We've seen 20 inbound inquiries over last month wanting to offer a banking product," he said. "We know there is an appetite. API banking technology is only going to get more prevalent."