The way forward is together. If you trace the history of today's financial technology industry, you'll see that we've moved from a theme of competition to cooperation.
Early fintech firms positioned themselves as substitutes, as competitors, to financial firms like banks and credit unions. Now, we're seeing fintechs evolve into partners to the incumbents. These collaborations and partnerships benefit both parties: banks get access to cutting-edge technology and modern products and fintechs tap into audiences and customers that have been built over decades.
Tearsheet studied nearly 100 different partnerships between banks and fintechs, across all kinds of products and services. We found three different types of partnerships in the industry, pointing to varying depths of integrations and collaborations.
- Vendor/Customer: Many of the partnerships in the industry are like more traditional vendor relationships. These integrations call for close collaboration and frequently require a fintech firm to create bespoke features for their new banking clients. The bank, for its part, then hitches its own wagon to its new fintech vendor and its product roadmap.
- Reseller: Banks themselves are getting more creative about their partnerships. Often, a new partnership will begin as a vendor/customer relationship and grow into something deeper. Once they get comfortable with new technology and their fintech partner, banks are rolling out these new products and technology to their own customers. In this model, banks become the hub of a larger financial technology ecosystem.
- Transformation: The minority of partnerships really transform both parties. But there are some out there that entirely change the trajectory of bank and financial technology firm, creating something that's greater than the sum of the parts. These uncommon relationships typically impact the entire industry.
Download the 2020 Tearsheet Guide to Bank/Fintech Partnerships
Tearsheet compiled its findings on bank/fintech partnerships into a guide that's free to download.