EXCLUSIVE—If fintechs want to land a successful partnership with a financial incumbent, understanding the regulatory atmosphere of the industry is crucial, Steve Smith, CEO of Finicity, told Bank Innovation.

When it comes to collaboration with FIs, Smith said, showing a willingness to work within, or at the very least a willingness to grasp regulatory principles, can go a long way towards a bank viewing a fintech as a serious partner.

“When we took the step to become a CRA, given the work we’re doing with credit decisioning, the feedback from larger financial companies was that this was a very mature approach,” Smith said. “It indicates that we’ve acknowledged that this industry is regulated, and that we take [financial services] very seriously.”

Founded in 1999, Finicity considers itself a fintech, according to Smith, and the company has certainly had its share of partnerships with incumbents. The company currently works with banks like JPMorgan Chase and Wells Fargo and collaborates with Fannie Mae and Freddie Mac, as well as maintains a close relationship with software provider Intuit.

The company also has a powerful partnership with credit reporting agency Experian, which holds a minority stake in the company, Smith said.

While innovation “outside of an ecosystem that has resisted change” is necessary for financial services to move forward, Smith said, eventually, fintechs are going to need to work inside of that ecosystem if they want that innovation to help customers.

Finicity developed its own partnerships through learning the market, Smith said, which is where many fintechs falter. The approach to the mortgage industry is a prime example, he said, an area that represents one of the largest “opportunities for change.”

“You have all of these millennials running into mortgages, telling [incumbents] how they’re going to disrupt this trillion-dollar industry. It’s naïve, or ignorance, or arrogance at a level where there’s not enough market understanding to make [an incumbent] feel comfortable in partnering,” Smith said. “Fintechs need to become students of the market.”