Bank Fintech Partnerships - Best Practices for Adding a Second (or Third) Bank Partner

To add new features or grow your capacity, you may need to add additional fintech bank partners.

Feb 28, 2023

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February 28, 2023

Sometimes, one bank partner isn’t enough to completely cover a fintech or enterprise’s embedded banking needs. You may need features your initial bank partner can’t support, you may need more capacity to onboard new customers, or you may want to diversify your setup and get more flexibility or better pricing.

One solution is to add a second bank partner. If your banking as a service (BaaS) provider offers a robust network of partner banks on the same API, the process is much easier than building an integration from scratch.

If your BaaS provider does not have a large network of banks, then it may be time to switch BaaS providers to an embedded banking software marketplace that can connect you with multiple banks and help you avoid a single point of failure in the future. This article will focus on how you can expand to additional bank partners.

Additional Bank Partners

Here are the key takeaways:

Fintechs and enterprises sometimes work with multiple bank partners so they can scale.
An expansive bank network allows you to add more than one bank partner to get the best pricing and features across different banks.
An embedded banking software platform with an extensive bank network and marketplace can make additional or secondary bank integrations easier by allowing you to add the bank through the same banking API.

Want more insight into embedded banking products for B2B SaaS companies? Download our ultimate guidebook.

Vast Fintech Bank Partner Network

Some BaaS providers partner with only one bank. That means if you ever run into issues with that bank, then you are stuck with what that one bank can offer. When that’s the situation, your company may find itself having to add a second BaaS provider or change BaaS providers in order to expand to working with multiple banks.

Similarly, if you partner only with a bank directly and no BaaS provider, adding a second bank will require building out an entirely new integration, which is extremely complex and time-consuming. Read our other posts to learn more about changing BaaS and bank partners.

Finding the right bank partner is not easy. You can increase your chances of finding the right ones by working with a BaaS provider with a vast bank network. Treasury Prime offers fintechs an unprecedented marketplace of 16 bank partners and growing, along with dozens of product partners providing services for cards to compliance and more. Since all these banks and partners are integrated with Treasury Prime and each other under one API, you can add multiple banks without having to rebuild your API banking integration with each one of them, and even move money between them seamlessly.

Case Study: Apollo founder Josh Wright, who was a software engineer at another fintech company that tried working with a bank directly to build an integration from scratch. It took four years just to launch, and by that time the company ran out of money and it was too late to pivot when the product failed to get traction.

“We were working with a bank directly. And their APIs were developed in the ‘90s and just never updated and lots of things didn't work and it was just really painful,” Wright says. “We had to build out a lot of features ourselves, like our own ledger and Nacha files.”

When Wright became a founder of Apollo, he chose to utilize Treasury Prime’s pre-built API instead of building out his own bank integration, and Apollo was able to launch live cards in 3 weeks.

“It’s so amazing to be able to launch a fintech product with Treasury Prime so ridiculously fast. And compliantly of course,” he said. “In terms of tech, there wasn't a whole lot to build up just because Treasury Prime handled all of that. So it was super easy.” - Josh Wright, Founder of Apollo

How to add a second bank partner

Adding a second bank partner typically goes hand-in-hand with growth. Your business has reached a stage where it has new needs, whether those be greater capacity or different features and services.

Benefits of adding a second bank partner

You are expanding into a new line of business — If you are looking to get into a new market or customer segment, you may need to add a second bank to address that new client base. That could look like adding a cannabis-friendly bank if you are interested in supporting new cannabis clients, for example; or it could look like picking up a business banking-focused partner if you want to add B2B services to a product that was originally primarily B2C.

Expanding capacity for accounts — Fintechs often partner with smaller banks for several reasons: They can offer higher interest rates, they are often more nimble than larger competitors, and they may be more open to innovation and experimentation. The flip side is that these partners may run out of capacity if your company grows rapidly. If you run into this, you may want to add a second bank.

You’re seeking better interest rates — Maybe you want to take advantage of rising interest rates. You can add a second partner bank to provide higher-interest accounts.

You need new features — Maybe you want to offer new features like book transfers, a card rewards program, or multi-user accounts. If your current bank can’t support your desired features, you may consider adding a second bank.

You want to avoid a single point of failure — Working with multiple banks can mitigate risk by eliminating a situation where the failure of one bank relationship damages your whole business. Companies that work with fewer but higher-net-worth customers may decide to work with multiple banks so they can quickly move a customer from one bank to another should an unexpected issue arise. Multiple banks can also come in handy when dealing with highly-regulated and emerging industries.

Integrating with the additional bank partner

The process of integrating with a new bank differs depending on your current bank integration setup.

Adding a second bank without a BaaS partner

If you integrate with a bank partner directly without BaaS as an intermediary, adding a new bank partner can be complicated. If you keep your current setup, you will have to integrate with multiple banking APIs and deal with multiple interfaces, which can be complicated and labor-intensive.

Adding a second bank with a new BaaS partner

If you are integrated with a BaaS partner with few bank partner options, that limits your ability to scale in the future if you want to expand your product offerings.

Your other option is to leave your BaaS and/or bank partner and integrate with a new BaaS provider that offers multiple bank options with a single API, which makes adding on or switching bank partners much easier, saving time and money. This sets you up for the long term and protects you from having to rebuild costly integrations in the future.

Adding a second (or third) bank from within the bank network of your current BaaS provider

Adding a second bank is straightforward if you are a Treasury Prime client. Because you are already integrated with our banking API, you don’t have to build out a new integration. Instead, Treasury Prime can add the second bank to your existing integration and facilitate a direct relationship between you and all your bank partners. That allows you to build a long-term relationship so you can tap into their products and compliance expertise. You then have the option of onboarding just new clients to the additional bank, transferring old clients to the existing bank, or creating accounts with both banks for individual customers.

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