Chris Dean, CEO and co-founder Treasury Prime.
Online affiliate marketing programs have been around since the days of dial-up. One of the earliest examples was PC Flowers and Gifts, which started in 1989 and paid commissions to website partners that sold the flower retailer’s offerings.
Affiliate marketing has looked basically the same since: A company pays a commission to publishers or other partners who send them business. One of the most prominent examples is Amazon, which pays commissions to sites and pages that link back to its products.
Linking to products is not the only way to run an affiliate marketing campaign. Application programming interfaces (APIs) allow for deeper relationships between closely aligned companies. This next step in affiliate marketing holds advantages for banks and fintechs.
Startups typically use API banking to fully integrate with a partner bank’s systems. Fintechs, especially neobanks, use APIs to open accounts for their users with a partner bank. But not every company that can benefit from a relationship with a bank wants to go that far. That’s where APIs for affiliate marketing can be helpful.
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What Kinds Of Companies Is A Bank Affiliation A Good Fit For?
Affiliating with a bank is a good option for companies that use banking services but don’t want to become a neobank. If your customers are also likely to need new bank accounts, but offering those accounts isn’t central to your services, you might consider an affiliate relationship with a bank.
For example, one of our clients, a business services platform, allows customers to apply for discounted small-business accounts with a digital banking provider directly through the company’s platform. The company doesn’t need to become a neobank to perform its main services, which are creating and managing new businesses. But by providing easy access to bank accounts, the company helps new businesses that are likely to need business bank accounts anyway, so this helps it meet another customer need.
Another example of an affiliate program could be allowing your users to see their bank information or access some banking tools from within your app. An affiliate relationship can be a way for your company to dip its toes into banking before diving in, or it could be as far as you go with banking services.
When Is A Bank Affiliation Not A Fit?
The affiliate approach is appropriate when you have decided you don’t need that fully branded customer experience. With this kind of setup, you act as a facilitator, introducing your customer to a bank. If you ever decide to change your banking relations, it won’t have as much impact on your core operations.
Like every business decision, entering an affiliate relationship with a bank isn’t the right move for every company. Another client of ours, an online accounting service, could have gone the affiliate route for example, but for them it was important for their branding to be on the account and on users’ debit cards. The company really wanted to be a neobank and to have access to all the tools that come with that.
Benefits Of Bank Affiliations
For your customers: Customers like it when you make things easier and more affordable for them. When you develop an affiliate relationship with a bank, you can do either or both. Banks are willing to offer special benefits to clients who come to them through you. If you use API banking to integrate bank tools or information into your app, you make it possible for your customers to see their bank information or use banking tools while they use your service.
For your company: Becoming a bank affiliate is much easier than doing a full bank integration. It requires fewer steps to get to market, which means you can get to market faster. Taking the affiliate route comes with less compliance risk, costs less and conserves development resources because you won’t need developers working on the banking piece. Some banks may be willing to pay you referral fees for sending them business; others may offer you a discount or deal in exchange for the referrals.
Considerations For Fintechs
If working with a bank would add real value to your services, but isn’t a prerequisite to your basic ability to serve your customers, you may want to consider affiliating with a bank. To pursue affiliation, you need to find the right bank partner and the right API banking provider.
• Finding your bank affiliate partner: The first step in your due diligence process should be downloading that bank’s app and using it. Open an account, really use it and see how that goes. If you don’t love the experience, neither will your customers.
• Finding your API banking partner: One word: transparency. API platforms should be upfront about their bank and other service partners, as well as their expected timeline for enabling you to launch your bank affiliate program.
As with any business relationship, seek out testimony from clients of your potential partner before signing a contract. Do other companies recommend working with the bank or API provider? Have banks/providers on your short list received any bad press? Consider quality first, then look at costs after you have narrowed your list.
Affiliating with a bank is lower stakes than fully integrating with one. If the relationship fails, your business will still be able to function. That said, you shouldn’t treat affiliations lightly. You can’t undo whatever experience you pass on to your customers.
When you’re ready to get started, reach out to a bank and propose an affiliate relationship. If they say no, don’t get discouraged. Try another bank that meets your criteria. Bank affiliation is a new approach to building services in the fintech and fintech-adjacent space. Whoever you end up working with should be just as forward-looking as you are.