Root Causes of Failed Partnerships
Biggest Challenges to Execution

Biggest Challenges to Execution


In a prior post, we said that partnerships among financial technology providers (incumbent and emerging) are critical for growth and becoming increasingly so. However, while they are relatively easy to establish, they are very hard to get right. The challenges lie in the design of the partnership and the execution of that design.

This post will describe the biggest execution challenges. In subsequent posts, we’ll cover in some detail the best practices for overcoming the challenges in a way that leaves both partner and the buyer delighted.

Wrong Partnership Objective

Many partnerships are established with the goal of generating more revenue for each party. However, there are costs in establishing and managing a partnership. So, the right objective is for the partnership to deliver margin for each party that they could not get on their own.

Objective should be profit, not revenue.

Unclear Client Benefit

The partners are very often not aligned about why the buyers benefit from the partnership. If there is no buyer benefit, they will not buy from the partnership in order to avoid the complexity of dealing with multiple parties. Partnerships can be harder on the client and can become a dissatisfier.

Clients must want a partnership solution or there will be no sale.

Just Another Client

Often, the partners treat the other as just another client. They use the same products, onboarding, operations, and customer support (and the rest of the business model) as they have been using for clients. In fact, they likely use the existing method in every business function. However, partners have unique needs. Depending on whether the partnership is designed to be loosely- or tightly-coupled, the partner may require tools for onboarding buyers, managing service levels, and rendering bills, to name just a few.

Partner needs are different than client needs.

Misaligned Expectations

The partners quickly become aligned on the high-level expectations of the partnership in terms of making more money, penetrating new markets, or augmenting product capabilities. However, the detailed expectations of the parties are usually not clear enough about deeper levels of detail. Examples include branding, account control, channel conflict, client onboarding, and much, much more. Expectations must be aligned on what will be achieved and how the partnership will operate.

Sync the partners on goals and execution.


The parties will often focus on the up-front investment to establish the partnership, but they will then under-invest in the management of the partnership. Some functions must be synchronized like sales, product management, customer support, incident management, and many more. Without formal Partnership Management, there will be little assurance that the parties’ objectives will be achieved, especially the clients’.

Partnerships require active management & continuous improvement.

Wrong Partnership Metrics

We described above that often the partnership will establish the wrong objective (incremental sales). When that happens, partnership metrics focus on things like deal flow, close rates, onboarding cycles, etc. The right objective (incremental margin) must also include metrics on things like cost, service quality, and risk so that they are more aligned with buyer objectives.

If the objective is incorrect, the metrics will be too.

More Than One Partnership Model

Some financial technology providers pursue more than one partnership model at-a-time. However, a good partnership model might look like something loosely-coupled (e.g., referrals) or tightly-coupled (e.g., OEM) and is usually something in between. Establishing and managing the successful model takes focused investment. Simultaneously pulling of an OEM model and Referral model requires resources that almost no fintech has, so, when multiple models are pursued, each model is under-invested and delivers disappointing results.

Multiple, simultaneous partner models are not sustainable.

In upcoming posts, we’ll cover the best practices to overcome these partnership execution challenges.

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