Should I work with a platform or directly with a bank?

The importance of choosing the right approach

In “What should I look for in a bank partner?”, we explore how bank partnerships work, as well as what to look for when evaluating a potential partner. In this guide, we’ll take the next step. Once you’ve defined your product, it’s time to find a bank partner and start building.

Here’s the thing: there are many different approaches to finding and integrating with a bank partner. Which you choose will affect things like your:

• Time to market
• Hiring needs
• Economics
• Product coverage
• Product stability/reliability

You may have heard the horror stories of companies that chose the wrong approach and lived to regret it. Some spent months or years attempting to launch a product or scale up with their chosen bank partner—only to learn, after the fact, that it wouldn’t be possible. Others launched financial features only to see their adoption limited by antiquated technology, latency, and unstable integrations.

You may have heard the horror stories of companies that chose the wrong approach and lived to regret it.

In short, the approach to finding and integrating with a bank partner is one of the most important decisions you’ll make. If you’re a founder, product manager, or other decision maker who’s considering how to pick a bank partner, this guide is for you.

How to find and integrate with a bank partner

At a high level, there are four ways to partner with a bank.

• Find a bank and work directly with them
• Work with a platform that is also a bank
• Work with a platform that supports only one bank partner
• Work with a platform that supports multiple bank partners

They vary widely in terms of who builds what and the resources required to go live. But it’s important to note that, no matter who is doing the building, the bank is ultimately responsible for ensuring that all financial products offered by the bank are compliant with relevant laws.

In this section, we’ll offer an overview of each approach, as well as some advantages and disadvantages associated with each. (article continues below)

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Approach #1: Find a bank and work directly with them

Many early fintechs chose to work directly with bank partners; Simple, Current, Uber, and Lyft are just a few examples.

Their reasoning was simple: back then, working directly with a bank partner was the most efficient way to offer financial features to your customers. But it’s become less common in recent years, as going live requires years and millions of dollars. You have to hire a big banking team, and the project tends to absorb a lot of available engineering bandwidth.

Like other single-bank integrations, this approach is vulnerable to slowdowns and/or changes to the bank’s business model. This model can result in a very close relationship between the fintech and the bank, and, at significant scale, it has the potential to yield better unit economics.

• Example company: Current
• Their bank partner: Choice Bank
• Typical time to launch financial features: 2 years
• Typical dollars to go live: $2M
• Do you need to hire a large team? Yes (10–50 full-time hires)

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Approach #2: Work with a platform that is also a bank

There are several platforms that are also banks; Column, Cross River, and Metabank are a few examples.

On its face, this model is appealing because it combines the bank charter and technology within a single partner. When executed well, it can provide the same relationship benefits as working directly with a single bank, but with a leaner tech stack. In some cases, the bank will also assist with compliance.

That said, it’s also vulnerable to any changes in the bank’s business. If the bank experiences a slowdown, then so will you. And unlike certain other banking-as-a-service platforms, there are no built-in alternatives, so you’ll need to find a new bank yourself.

• Example company: Atlas Banking
• Their banking-as-a-service platform + bank partner: Cross River Bank
• Typical time to launch financial features: 6-12 months
• Typical dollars to go live: $100K-$200K
• Do you need to hire a large team? Likely yes, depends on the operational and compliance support from the bank

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Approach #3: Work with a platform that supports only one bank

This is the structure used by most banking-as-a-service platforms and their customers.

Each establishes a relationship with a single bank partner and powers all of their clients’ financial features through that relationship. The advantages of this model are that you can go live fairly quickly, with relatively few resources. In some cases, the platform will also streamline compliance for you, which reduces the amount of ongoing work that must be handled by your team.

But the weaknesses of choosing a model with a single bank partner are evident in the story of BBVA. They were a pioneer in the banking-as-a-service space with the launch of their Open Platform in 2019—but then they decided to cease fintech operations in 2021. Their fintech clients were forced to find an alternative solution on short notice. This same pattern has been repeated several times since; it’s hardly an isolated incident. 

• Example company: Qoins
• Their banking-as-a-service platform: Bond
• Their bank partner: Evolve Bank & Trust
• Typical time to launch financial features: 2 months
• Typical dollars to go live: $50K
• Do you need to hire a large team? Usually not (0–2 full-time hires)

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Approach #4: Work with a platform that supports multiple banks

This is the way Unit, our company, is structured. 

Although it takes more effort on the part of the platform to establish and maintain several bank-partner relationships, it can also yield a wider range of supported financial products and greater resilience and flexibility.

Having relationships with more than one bank partner allows fintechs to find the bank partner up front that best matches their needs and to more easily transition if the time comes to switch or add new banking providers. If the platform streamlines compliance obligations like the KYC onboarding process and PCI-DSS compliance, it can also result in a faster time-to-market.

• Example company: Invoice2go
• Their banking-as-a-service platform: Unit
• Their bank partner: Blue Ridge Bank
• Typical time to launch financial features: 2 months
• Typical dollars to go live: $50K
• Do you need to hire a large team? Usually not (0–2 full-time hires)

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Why Unit chose to partner with multiple banks

Unit is a banking-as-a-service platform. That means we help technology companies offer financial features to their customers.

When we were first building Unit, we had a choice about how to structure our business banking platform. Would we try to become a bank? Establish a relationship with a single bank partner? Require our clients to establish their own bank partnerships?

Ultimately, we decided that the best way to structure our platform was to support multiple bank partners. We wrote about it in our recent blog post, “Why Unit works with multiple bank partners—and how that benefits you.” But here’s the short version:

• Speed to market. With reliability as one of our 5 core values, it’s important to ensure that we can give each new customer a fast and predictable go-live date. That said, all banks are subject to periodic audits and re-certifications, during which their ability to focus on new partnerships ebbs and flows. We find that, by supporting multiple bank partners, we can match you with the one that’s able to help you get to market in the shortest possible time—often a matter of weeks.

With reliability as one of our 5 core values, it’s important to ensure that we can give each new customer a fast and predictable go-live date.

• Capacity at scale. In the past, some banks that support tech companies have asked them to limit their growth, citing (among other reasons) their inability to keep up with increased oversight demands. For this reason, tech companies that scale beyond a certain size may ultimately need to find and integrate with multiple bank partners. You can mitigate this risk by partnering with a platform that already supports multiple bank partners. In fact, Unit has already helped several clients launch their products on multiple bank partners.

• Reliability. From time to time, banks will experience a change to their business. Maintaining multiple bank relationships ensures that any short-term issues will only affect a fraction of our customers. And, in the event that challenges persist, it’s relatively easy for us to migrate a customer from one bank partner to another. 

• Product completeness and terms. Banks have different specialties. Some pay higher interest rates; others offer competitive financing. Some prefer to work with consumers; others specialize in business banking. Maintaining multiple bank relationships allows Unit to support the widest possible range of financial products and services. We can pair you with the bank partner, or partners, that match your needs and give you the best terms.

Fortunately, the decision to support multiple bank partners has been paying dividends. Since we launched in December 2020, we’ve signed more than 150 customers, large and small, across a variety of verticals and use cases. (See, for example, our Outgo case study.) We continue to launch new clients with our multiple bank partners each week.

Still wrestling with how to find and integrate with a modern banking platform or partner? Feel free to drop us a line.