Like peanut butter and jelly or ice cream and hot fudge, fintechs and financial institutions can be a great pairing. But there’s a lot for both sides to think about when considering a partnership.

That’s the focus of Wednesday’s “Symbiosis of Fintechs and Financial Institutions” session at Smarter Faster Payments Remote Connect.

One typical partnership is on lending. Today it’s common for fintechs to do most everything “except what is the regulated activity, which is loan origination,” said Parag Patel, Senior Associate at the law firm Orrick.

Another likely partnership is on traditional banking services, where a fintech “works hand-in-hand with a bank to say, ‘I will handle the front end of this, I will handle the acquisition, I will make the app that the customer sees, and then you’ll be the chartered bank that supports the customer,’” handling the regulated activities, said Ryan Nier, General Counsel and Chief Compliance Officer at the fintech Digit.

Benefits abound, with Nier noting that “consumers get a better product for a lower or the same price.” Patel said fintechs are helped by the fact that “banks bring that FDIC insured reputation to the table.”

From the financial institution perspective, Doug Smith, Vice President, Cyber and Privacy Legal Group at Morgan Stanley, said “there’s a lot of value in having this kind of partnership for a bank, No. 1 of which is leveraging the fintech’s expertise and talent to really develop new experiences for customers.” Financial institutions, Smith said, “have to innovate, because it’s becoming easier and easier to move business from one bank to another to obtain services that are more convenient for individuals.”

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