Bank-fintech partnerships are a hot topic because of the friction in how the relationship between the two parties are structured. According to a new report from Cornerstone Advisors, titled The State of the Union in Bank-Fintech Partnerships, found that nearly nine in 10 financial institutions consider fintech partnerships to be important to their business, up from 49% in 2019.
The highlights of report :
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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.
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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.
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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, the report noted