Lessons learned from partnerships between banks and FinTechs: A game of value chain transformation

After the initial impression that banks and FinTechs are on opposite sides of the same game, it seems that ‘opponents’ have the potential to make successful alliances. But the whole concept of partnership should not be restricted to procurement processes — banks’ legacies in combination with FinTechs’ agility and innovation require deeper transformation and alignment of value chains from the perspective of the end customer, in order to set up a sustainable ecosystem. An opportunity for banks to rapidly consume technology capabilities without building them internally is the only opportunity for banks to be agile enough in the model transformation of the banking business. Banks should focus on convenience, and providing value through embedded advisory relationships within new distribution channels, as well as reducing the information asymmetry and efficiently meeting the regulatory framework. They should leave the tech part to the FinTechs. FinTechs have proved that they can shake the banking industry in terms of their speed and efficiency, accessibility, cost effectiveness, innovation and user-centric approach. Banks, on the other hand, have clearly demarcated their competency fields: regulatory compliance, security and trust, global infrastructure, risk management and incident response.1