Bank-fintech collaborations are nothing new. In a 2019 study, a staggering 81% of banking executives surveyed by Finextra said that their best bet for delivering on their organisations’ digital transformation goals was to team up with newcomers. Other options, like building a new operating layer of their own (8%), outsourcing processes (6%) or creating a new bank on the side (5%), were barely considered.

What has changed since, however, is that banks now also have a blueprint for such partnerships. In fact, it might just be the key to thriving in an ever-so-competitive market. 

“Fintechs started to pop up in the early 2010s. First, they were viewed as competitors – and small ones at that. No large bank thought of them as a real threat on a 3-5-year horizon,” recalled Michael Anyfantakis, platform lead at Amsterdam Trade Bank, during last week’s panel discussion on the key opportunities and challenges of bank-fintech collaborations. 

The tables have turned when, with the rise of challenger banks, a new breed of banking consumers has also emerged. One that will settle for nothing less than the best of both worlds. “Instead of just going after customers, financial technology firms started going to banks with ideas on how to build better customer experiences. That’s when banks started to look at them as collaborators instead of competitors.”

2020s: the golden era of bank-fintech coexistence?

If truth be told, these partnerships were off to a rather rocky start. Although at the cutting edge of technology innovation, the new kids on the block were in the early stages of building their value proposition, client base and security protocols. In other words, everything that a traditional bank first checks when vetting a new supplier.

Whenever you start working with a fintech, you become dependent. You must be sure that the cooperation is sustainable and will not end in a few months.
Iryna Arzner, Head of Group Retail CRM at Raiffeisen Bank International

Not to mention business continuity concerns. “Whenever you start working with a fintech, you become dependent. You must be sure that the cooperation is sustainable and will not end in a few months,” said Iryna Arzner, head of group retail customer relationship management at Raiffeisen Bank International, one of W.UP’s long-term partners.

By now, however, many of them have built compelling track records of project delivery and impact. They’re much more credible and mature, with years of experience in driving digital transformation across an industry hindered by robust regulation, legacy systems, branch-centred culture and product-first thinking.

Relationship advice: how to make bank-fintech collaboration a success?

“At Lloyds, we’d been searching for a new partner in the core banking space and eventually chose Thought Machine. Their technology was top-notch in terms of engineering and had a huge potential as a core banking solution. But we couldn’t risk being their second or third client. It made more sense to become an investor in the firm,” explained Anyfantakis. The partnership has given Thought Machine greater funding stability and credibility, while it has served as a catalyst for product innovation at the retail banking giant.   

Classic client-supplier-type relationships are also common, combining the speed of fintech innovation with the massive market penetration of long-standing financial institutions. Either way, there are three things that are crucial to making the alliance work for all, the experts warned.

From a fintech point of view, a concerted organisational effort is key. According to Lisa Gutu, head of business development at Salt Edge: “Product teams are always eager to move quickly with technology implementation. But open banking means access to transactional and balance data as well as payment initiation, which poses a huge risk on the bank’s side.” Her advice? Involve legal and security teams in the project as early as possible to get ahead of compliance hurdles and potential delays. And always find a person who’s committed to aligning internal processes and stakeholder buy-in for a fast and painless delivery.

A clear, shared purpose is no less important. After all, great tech is only an advantage if it solves an actual problem for banks and their customers. This is something both parties must be mindful of – or they risk investing tons of resources, financial and otherwise, in a project that doesn’t bring results, only frustration. 

The third pillar of a bank-fintech symbiosis is flexibility. As Raiffeisen’s customer relationship management chief advised: “The bank should be ready to adapt and the technology provider to tailor the product to the bank’s exact needs.”

Best practices in Fintech partnerships

Best practices in Fintech partnerships

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