Bank-FinTech partnerships have taken the banking industry by storm. Most banks and credit unions now consider FinTech partnerships to be crucial to their future success. But what kind of partnerships are we talking about? And what drives the success of these partnerships? This study from Cornerstone Advisors, based on a survey of 290 U.S.-based senior bank and credit union executives and interviews with execs with experience with fintech partnerships, finds that:
- Bank-FinTech partnership activity is heating up. Nearly two-thirds of banks and credit unions entered into at least one FinTech partnership over the past three years, and 35% made an investment in a FinTech. Of those that haven’t partnered or invested, 37% plan to partner in 2022, and 18% expect to make an investment in a FinTech in 2022.
- FinTech partnerships may be falling short of financial institutions’ (FIs) objectives. Few FIs report that their partnership efforts have produced significant gains in loan volume or productivity, or in driving revenue from new products and services.
- Technology integration is a big challenge for Bank-FinTech partnerships. Integrating with the core and ancillary systems is the biggest hurdle, while many FIs cite digital banking platform integration and lack of application programming interface (API) experience as major challenges.
Successful FinTech partnerships require financial institutions to develop new approaches to 1) organizational structures, 2) new product development and deployment, and 3) integration.
About the report
This report intends to identify the state of the union in Bank-FinTech partnerships—how active are financial institutions in FinTech partnerships, banks’ objectives for FinTech partnerships, the business impact of partnerships, how FIs staff for partnering, and FIs’ future plans for FinTech partnerships. The report concludes with recommendations for successful partnerships.
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