Big, splashy announcements of freshly-forged partnerships between FinTechs and mainstream payments and financial services players are released by the dozens these days.
As for the “game changing” innovations they promise will “reshape” the landscape as we know it? As Flywire CEO Mike Massaro told Karen Webster in a recent conversation, that often depends on what the flavor of the month might be in payments and financial services.
“How many times in the last few years have we seen what are basically press release partnerships where a big player will come to the table to announce they are testing a new technology, like blockchain, recently?” Massaro said. “And you see FinTechs racing to get as many press releases out there with as many banking partners as they can because they want to build PR momentum.”
The problem, he said, shows up when the rubber starts to meet the road. When it’s time to start building a solution for whatever massive, global-sized problem their press said they planned to tackle, there’s no clear vision for what they are doing or how exactly it is going to drive actual benefits for actual customers and clients.
When it becomes clear that idea at hand — for all its grand intentions — doesn’t have a clear or organic path to delivering real and quantifiable value for banks, they tend to step away from the projects.
That can make things a bit tricky when one is announcing a new partnership, as Flywire did last week with Bank of America, that is far from an agreement on press release paper alone. The new partnership, Massaro said, is designed to provide BoA clients enhanced access to their cross-border payments and receipts, as well as offering a streamlined cross-border payments experience for BoA’s higher education and corporate clients. That streamlined experience will include improvements like providing international customers with foreign exchange rate transparency, or allowing customers to remit funds via local payment methods via Flywire’s platform.
“Bank of America doesn’t need another press release, they needed a less clunky process that offers a payments network capability on both the send and receive side for cross-border, large-ticket payments for their corporate clients, and in a way that eliminates the friction when different pieces of their businesses have to manage receivables and FX from all of those flows,” Massaro said.
Built From a Natural Evolution
The partnership between BoA and Flywire is new, but their association is long, Massaro noted. Flywire has been a growing part of BoA’s payments flow for the last few years because it has been delivering “millions of dollars of flow into their client’s accounts” for some time. In fact, Massaro said, they’ve seen the multi-millions of dollars that Flywire is moving consistently rise as it expands its money moving services to more verticals. This year, Massaro said, that will be something close to $12 billion in payments volume.
That volume triggers what Massaro described as a “tipping point” in terms of how banks consider the services Flywire is providing to their clients. That happens, he explained, when what was once “thousands of wire transactions” coming into their accounts are replaced by one or two larger ones coming by way of Flywire.
When banks see that shift in their data, Massaro said, that gets the wheels turning at banks that see an opportunity to offer clients a single point of management and payer engagement from billing and payment through reconciliation, faster processing, more access to local payment methods, easy ERP integrations and 24/7 online tracking. Flywire is the network that provides that capability, and the bank is the trusted channel through which clients are getting the service.
Building Value on a Trust Foundation
There is and has been an ongoing debate in financial services for the last few years as to whether consumers still trust their banks in the ways they once did — and if that trust is something that FinTechs will ever be able to match. What data and Flywire’s recent sign-on with BoA point to, Massaro said, is that the answer to that question is a resounding yes. Banking clients, particularly corporate and education clients that are dealing with massive transfers of funds, very much find this relationship of trust to be absolutely primary.
“There were educational institutions we had been struggling to sign up who were still leveraging the wire system who have just been slow adopters of any new technology,” he said. “It has been amazing to us that some of the universities that have been the hardest to crack have now decided they are ready to move to this tech. We are endorsed by Bank of America now — and that was the step they needed to push them forward.”
The core of banking is in many ways what it always has been — trust and relationships. Instead of trying to break up that relationship, FinTechs are increasingly getting smart and realizing they have a much better future finding ways to enhance it. Collaboration in many cases is more mutually productive for both banks and FinTechs than competition.
But not all collaborations are created equal, Massaro said, and partnerships on paper and in press releases won’t be what moves the ball in the world of remittances, or anything else.
“The thing to watch always is which of these partnerships actually breaks out and delivers value for clients as opposed to just sounding interesting at the time it is announced,” he said.
Flywire, clearly, is aiming for the former and not the latter.