The demand for innovative financial solutions is rapidly evolving. Credit unions looking to stay competitive in the market will need to adopt a culture of innovation. However, building or buying capabilities is an expensive proposition. Partnering with fintech startups can open the door to best-in-class products and services that meet the growing expectations of members. Fintechs can bring needed capabilities that fall outside of a credit union’s core expertise. A partnership allows credit unions to bring solutions to market significantly faster than building internally while managing limited internal resources for core capabilities. The following are high-level considerations to be used when evaluating fintech start-up companies as potential partners:
1. Determine your credit union’s risk appetite
The word “start-up” covers a wide range of companies. Early-stage startups, for instance, are likely testing rapidly in search of product-market fit for their solutions. For these companies, there is a high likelihood that the business will pivot its product significantly, switch its go-to-market approach away from a partnership model, or potentially run out of capital. As start-up companies mature, these risks decrease.
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