December 15, 2022

Why Every Bank and Credit Union Needs a Fintech Hub

by Charles Colt in Banking Core Integration , Fintech 0 comments

When I joined PortX in August 2017, it was a scrappy startup with a reputation as one of the premier MuleSoft integration consulting partners (winner of two Partner-of-the-Year awards). At the time, PortX had begun its transformation from a pure-play integration consulting firm to a payment and integration software company focused on serving community banks, credit unions, and fintechs. Today we deliver business outcomes almost exclusively for the financial services space on the PortX integration platform, also known as our “Fintech Hub.” Here, I’ll share the customer learnings that drove our transformational journey and recommend what to consider when choosing an integration partner to help your organization to innovate faster.

Community financial institutions needed more

When our team started working with community financial institutions (CFIs), it didn’t take long to realize that they needed more than what the leading, general-purpose integration platforms offered. CFIs repeatedly shared that the industry lacked an enterprise integration solution that met their specific needs across five categories: 

  • Acceptable cost – When CFIs make the strategic decision to unlock their banking core and enable rapid innovation through APIs, they often face a double-cost situation. In addition to investing in an integration platform, they frequently bear additional costs from the core vendor to access their data through proprietary interfaces. When we proposed solutions that included popular integration platforms at the time, many CFIs told us that it was untenable to pay for both the integration platform and the core vendor’s access fees, typically within the same price range. To even be considered as a prospective solution, the integration platform had to be much more cost-effective.
  • Partnership vs. Vendor Management – When it comes to transformational initiatives, CFIs are looking for a partner, not a vendor. They need a partner who specializes in financial services, knows how their business works, and can bring additional expertise besides integration. More importantly, they need that partner to be available for them at all times. This insight compelled us to pivot PortX from a pure-play integration company to one specializing in financial services solutions. 
  • Dedicated services delivery team – Many CFIs operate in a lean manner and purposefully avoid staffing the architects, developers, and project managers required to deliver the organization’s integration needs. PortX recognized that our solution must include dedicated experts to deliver on our customers’ roadmaps, understand their environment intimately, and collaborate with their team on a deeper level for years to come.
  • Fintech onboarding – A CFI’s ability to innovate heavily depends on the ease with which they can onboard fintechs and integrate them with the banking core. As PortX targeted its solutions to CFIs, we also began to partner with a greater number of fintechs with compelling integration needs of their own. We developed greater familiarity with the requirements for fintech onboarding and also developed our capabilities with Banking-as-a-Service (BaaS) and embedded finance solutions.
  • Freedom of choice – As much as we love our customers, we recognize that we must always give them the portability and flexibility to choose any vendor they want, even if that means replacing us. For this reason, our APIs and data mapping are completely portable should our customers decide to go elsewhere. The best partnerships are based on a mutual exchange of value, not vendor lock-in.

Building the integration platform for financial services

In 2017, there was no product that could deliver all of these requirements for CFIs. As a company, we faced a daunting yet exciting choice: limp along with the integration platforms we knew best, or build the integration platform that our customers actually needed. After careful deliberation, we targeted our focus exclusively on CFIs and fintechs to develop the integration platform, service offerings, and partnership model that would best suit their needs.

We partnered with some of our existing CFI customers as early adopters of the platform to provide us with a deeper set of requirements and validate the benefits of our solution. We focused on industry requirements such as SOC2 compliance and hired financial services veterans – especially in sales, delivery, and engineering. 

From a technology perspective, we leveraged best-of-breed, open source solutions and combined them with our in-depth integration best practices and API development capabilities. 

Three customer insights that shaped PortX

Our approach resonated with early adopters and resulted in many learnings that we subsequently rolled into our platform. In particular, three customer insights influenced how we evolved our products and services.

Not all integration partners are created equal

In the past five years, it’s been personally illuminating for me to hear our customers talk about the challenges they’ve had working with different partners.

Larger integration companies often use low-cost, outsourced partners to defray expensive license fees. While this makes sense from a financial perspective, it seldom provides optimal results for CFIs. Many of these low-cost, outsourced partner firms possess little knowledge or experience of financial services, placing the burden of managing the integration team squarely on the CFI.

PortX, by contrast, remains engaged with our customers long after the license contract is signed. We collaborate closely with our customers on driving results as part of the same team. One way we do this is by providing a dedicated squad to deliver our customer’s projects as needed. We also conduct onsite workshops and maintain real-time communication channels with our customers on Slack, Teams, or another collaboration platform of their choice. 

For me, this collaborative approach has been one of the most gratifying experiences during my time at PortX. We have helped customers not only integrate backend financial systems and attain faster access to their own data, but when needed, we have also profiled their entire enterprise landscape, enabled their teams, and helped them navigate particularly thorny vendor situations. This intimate level of engagement with our customers shores up our commitment, accountability, and ability to deliver results. It’s also a much more satisfying way for us to partner with each other. 

Your integration partner should know your business

I’ve become acutely aware of the difference between integration firms that merely include financial services among their customers and those that build their entire business around financial services. The former may have a few good people, cherry-pick examples from past engagements, and reference them as accelerators. In our case, the ongoing collaboration with our customers refines our domain expertise in integration and payments. When needed, we also leverage our fintech ecosystem to provide customers with deeper knowledge of solutions such as online banking, online account opening (business and consumer), lending, document management, data services, and more. We frequently collaborate with our customers not only on project delivery but also sales, research, and development.

For any CFI evaluating an integration partner, my advice is to determine how many financial institutions that company has partnered with and then to dig deeper by asking some of the following questions: With which banking cores have they integrated? Which online banking systems have they worked with? Which lending systems do they have experience with? What can they tell you about the nuances of integrating with various banking cores? What is their strategy for onboarding fintechs? What would they advise you to consider when implementing your BaaS layer? What is their position on FedNow readiness? If the partner lacks thorough knowledge of these areas, you will likely spend time educating them instead of benefitting from their expertise.

Concentrating on financial services has positioned us to better serve our CFI customer base with challenges such as working with core vendors on schedules and logistics, which are typically notorious time suckers. Growing our ecosystem of fintechs and banking core vendors has enabled us to advocate for our customers within these organizations.

The platform must enable your future

Our conversations with new and existing customers inevitably focus on their future goals. Some need support for acquisitions and want to ensure that new systems will integrate seamlessly with their existing IT landscape. Others are looking for a safe and easy means to replace key systems such as the banking core. And some are looking for simplified fintech onboarding capabilities that can unleash compelling new services for their customers. 

Our customers frequently tell us that in addition to solving today’s problems, they also want to set up the organization for future success. For this reason, we specifically evolved the PortX platform to deliver:

  • Open Banking APIs standardized common banking operations in a universal data model
  • Connectors for the leading banking cores
  • A growing marketplace of leading fintechs that we have integrated for several financial institutions and banking cores
  • A hosting platform with managed services and support
  • A dedicated development team ready to start your project work tomorrow
  • Integration consulting experts who know your business 
  • A R&D team focused on banking, payments, and integration
Want to know more?

It has been an amazing transformational journey for PortX and for our customers. As I head into my sixth year with the company, I am excited to see the growth of our fintech marketplace and the innovation that our customers will unleash with PortX in 2023. In my next blog, I’ll elaborate on why we at PortX and many of our customers refer to our platform as “Fintech Hub.”

If you would like to learn more about what to consider, which questions to ask, what kind of answers to watch out for, or anything else that can help you assess whether an integration solution will truly unlock innovation opportunities for your CFI, let’s keep the dialogue going. We are happy to share our experience, provide thoughtful context, give you more options to consider, and partner with you through your selection process – independently of whether or not you choose PortX. Start a conversation today.

Leave a comment