Bank fintech partnerships are becoming increasingly important as financial institutions respond to changing expectations around payments, mobile banking, and digital financial services. While banks and fintech companies have often been viewed as competitors, the growing demand for faster and more convenient payment experiences is creating opportunities for collaboration.
Real-time payments are one area where these complementary strengths could become particularly valuable. Banks bring established customer relationships and financial infrastructure, while fintech companies and technology providers can offer the agility and specialized capabilities needed to introduce new services more quickly.
While psychologists believe that opposites attract, they also say that over the long-term they can drive each other crazy – Could this happen with Banks and FinTechs?
Although banks may have seen FinTech firms in the past as little more than a fad, concocted by liberal techy types, they have begun to comprehend that these disrupting start-ups are slowly transforming various sectors within the financial services industry – not least of all, the payment sector.
Banks and FinTech companies, often seen as adversaries within the financial services industry, have seem to struck a chord when it comes to the payment sector – and this is largely attributed to the emergence of real-time payments.
The wind of change taking place in the payment sector, is down to the growing demand from consumers and businesses for real-time payments.
In an increasingly digital world, where instant notifications and immediate satisfaction have become the norm, traditional banks have not been agile or innovative enough to meet this customer expectation.
Technology Partnerships Expand Beyond Real-Time Payments
For some banks and credit unions, partnerships with their core and channels technology providers have been underway for quite awhile. For others, such relationships are just beginning. As financial institutions look to expand their mobile banking options to include mobile wallet and other payments solutions, these alliances will undoubtedly deepen and expand. Such partnerships should deliver faster-time-to-market while offering expanded features to better compete with both traditional and non-traditional solutions providers.
As mobile banking, mobile wallets, and emerging payment services become more important to consumers, financial institutions will need to determine how quickly they can develop and deploy new capabilities. Working with outside technology providers can give banks and credit unions another path to expanding their offerings without building every solution internally.
Ultimately, bank fintech partnerships could help financial institutions shorten development cycles, introduce broader payment functionality, and respond more effectively to competition from both traditional institutions and non-bank providers. As demand for real-time and mobile payments continues to grow, these relationships are likely to play an increasingly important role in the evolution of financial services.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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