# How partnerships between FinTech start-ups and traditional banks herald a brave new world of opportunity
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-07-12
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: The Future of Financial Services: The Power of Partnerships
Meta Description: Discover how disruptive technology and collaboration between FinTech start-ups and traditional banks are shaping the future of the financial industry.
URL: https://financedigest.com/how-partnerships-between-fintech-start-ups-and-traditional-banks-herald-a-brave-new-world-of-opportunityhtml

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/choosing-banks-1736815591721-compressed.jpg)

![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/angus-panton-450x512-1736815591754-compressed.jpg)

_By_ **_Angus Panton,_** _Director of Banking and Financial Services,_ [_Expleo_](https://protect-eu.mimecast.com/s/VfFlC6WpLCVxvyNipnf3f?domain=expleo.com/)

Disruptive technology often comes from the perfect pairing of deep experience and new ideas, creating something greater than the sum of its parts. Think of when telecoms pivoted to data, the media adopted streaming or bricks and mortar retailers embraced online. Financial services are no different – the opportunity for innovation through partnerships between FinTech start-ups and traditional [banks is set to shape the future of the industry](https://www.financedigest.com/the-survival-of-the-banking-industry.html "THE SURVIVAL OF THE BANKING INDUSTRY"). And, whether it is imagining a new way to make payments possible or [transforming customer experience](https://www.financedigest.com/transforming-the-banking-experience-to-be-mobile-first-and-people-centric.html "Transforming the banking experience to be mobile-first and people-centric") with powerful AI, there’s a lot to be said for the power of the partnership.

**Start-ups, not up-starts**

[FinTech start-ups have made](https://www.financedigest.com/fintech-v-the-banks-uneasy-bedfellows-or-a-match-made-in-heaven.html "FinTech v the Banks: Uneasy Bedfellows or a Match Made in Heaven?") significant in-roads over the last ten years into what was often seen as  a narrow sector. From challenger banks to peer-to-peer payment apps, there is a FinTech start-up for everything and anything financial and while some fail hard and fast, others break through with [technology that has the potential to change the way the global banking](https://www.financedigest.com/6-technology-trends-banking-2019.html "6 Technology Trends for Banking in 2019") system works. And, as [FinTech matures its looking to the establishment for ways](https://www.financedigest.com/3-key-ways-you-can-transition-from-finance-to-fintech.html "3 key ways you can transition from finance to fintech") to strengthen both its reach and impact.

Most big [banks offer customers everything from credit](https://www.financedigest.com/explainer-what-are-credit-default-swaps-and-why-are-they-causing-trouble-for-europes-banks.html "Explainer-What are credit default swaps and why are they causing trouble for Europe’s banks?") cards to mortgages, business banking to ISAs.  They’ve developing end-to-end [financial products and services](https://www.financedigest.com/devops-the-secret-tool-thats-transforming-financial-services.html "DevOps: The Secret Tool that’s Transforming Financial Services"), backed by a strong reputation built over many years in the marketplace.  FinTech on the other hand tends to be driven by specialisation, taking a [problem or pain point and devising a technology-driven solution for a digital native customer](https://www.financedigest.com/australias-qantas-apologises-to-customers-for-operational-problems.html "Australia’s Qantas apologises to customers for operational problems"). FinTech start ups are not [weighed down by legacy systems](https://www.financedigest.com/retailers-weighed-down-by-their-own-legacy-systems-survey-reveals.html "Retailers Weighed Down by their own Legacy Systems, survey reveals"), they are digital first organisations, complete with slick customer journeys, equally smart marketing and a clearly defined customer and market niche in mind.

What the up-start has in abundance the old guard can lack – and vice versa, but by marrying strengths to create a symbiotic partnership, the benefits are truly exciting.

**What opportunities await?**

Many FinTech start-ups [focus on a single product and do so really well – but may lack the internal infrastructure and security protocols to meet](https://www.financedigest.com/dollar-skulks-at-eight-month-low-central-bank-meetings-in-focus.html "Dollar skulks at eight-month low, central bank meetings in focus") regulatory requirements. Equally, they often start from scratch with the customer to build brand equity and reputation. This is where partnering with a traditional institution can really work – after all, scaling together can be easier than scaling alone.

For [FinTechs with existing brand equity where the product IS their business](https://www.financedigest.com/fintechs-support-of-ukraines-digital-businesses-can-be-used-as-blueprint-across-the-world.html "Fintech’s support of Ukraine’s digital businesses can be used as blueprint across the world"), full integration might not be the right fit, but a partnership built around an affiliate approach can still work well.

So although [FinTechs and traditional banks](https://www.financedigest.com/britain-seeks-to-boost-banking-services-from-fintechs.html "Britain seeks to boost banking services from fintechs") are often framed as nothing more than competitors, there is an opportunity for a more dynamic, symbiotic relationship – that capitalises on their relative strengths. Combine this with legislative pressure on [banks to increase the pace of their customer journey and digital transformation projects and you’ve got the perfect environment for disruptive technology](https://www.financedigest.com/the-rise-of-biometric-technology-in-banking.html "The rise of biometric technology in banking") to flourish.

For example a [FinTech can provide a bank](https://www.financedigest.com/why-banks-could-stand-to-learn-a-thing-or-two-about-financial-inclusion-from-fintechs.html "Why banks could stand to learn a thing or two about financial inclusion from fintechs") with a ready-made digital product, helping the bank bypass years of costly development. In turn, the bank might shoulder regulation, compliance and financial transactions – helping the [FinTech get its product to market](https://www.financedigest.com/2021-and-the-fintech-market-bonanza.html "2021 and the fintech market bonanza") with fewer roadblocks. By doing so everyone wins – including the customer!

**The [brave new world](https://www.financedigest.com/is-wearable-technology-ushering-in-a-brave-new-healthy-world.html "Is wearable technology ushering in a brave new healthy world?") (and how to tame it)**

**Managing change with structure and agility**

[Start-ups often enter into partnerships without way](https://www.financedigest.com/5-ways-that-start-ups-can-attract-investors.html "5 Ways That Start-Ups Can Attract Investors") markers or precedent – making it hard to predict what should be built into contracts and the cultures they’re bringing together. [Building a phase into the plan](https://www.financedigest.com/best-guide-to-build-a-personal-financial-plan.html "Best Guide to Build a Personal Financial Plan") to allow for full discovery and due diligence might sound obvious but is often overlooked.  By planning ahead, FinTechs can be ready for the [business change required to execute the partnership](https://www.financedigest.com/types-of-business-partnership.html "Types of business partnership") effectively and with as much foresight as possible.

By [exploring mutually beneficial target operating](https://www.financedigest.com/exclusive-ardian-explores-taking-italian-tower-operator-inwit-private-sources.html "Exclusive-Ardian explores taking Italian tower operator INWIT private-sources") models and carrying out thorough process mapping it helps prospective partners to create an agreed blueprint or ‘partnership vision’, ensuring that it this is well-aligned with both party’s real-world operational capabilities.

**Avoiding the culture clash**

[FinTech can sometimes struggle to adapt to traditional banking’s](https://www.financedigest.com/attacking-banking-and-fintech-fraud-head-on-through-ai-infused-strategies.html "Attacking Banking and Fintech Fraud Head-On Through AI-Infused Strategies ") corporate structure and operating model, and this can be made more complex by the weight of legacy IT systems and multi-layered bureaucracy.

Time spent understanding culture and [ways of working is essential to get both businesses](https://www.financedigest.com/6-ways-to-spring-clean-your-business-finances.html "6 ways to Spring clean your business finances") to a place where they can align roadmaps, streamline processes, engage their people, understand their stakeholders and produce that all important proof of concept.

**The tricky trio – regulation, compliance, and cybersecurity**

Although the path for new entrants to financial services has been smoothed in recent times, the Prudential Regulation Authority (PRA), the body that issues [banking licences in the UK, still expects applicants to have an in-depth knowledge of how banking works](https://www.financedigest.com/boes-bailey-says-bank-reforms-worked-but-questions-about-liquidity-buffers.html "BoE’s Bailey says bank reforms worked but questions about liquidity buffers"). This means [FinTechs need](https://www.financedigest.com/if-the-nation-backs-fintech-we-need-to-address-a-few-things.html "If the nation backs FinTech, we need to address a few things") to demonstrate due diligence, provide strong evidence that their tech is fit for purpose and meets customer needs.

FinTechs that take time to build a highly skilled team, with the right level of expertise across all disciplines, including cybersecurity, will find this highly [advantageous when it comes to establishing a culture of compliance](https://www.financedigest.com/turning-big-data-compliance-into-a-competitive-advantage.html "TURNING ‘BIG DATA’ COMPLIANCE INTO A COMPETITIVE ADVANTAGE") and a strong reputation in the industry. Equally, working with a partner that is willing to support and share best practice will go a long way towards a [FinTech’s ability to confidently meet](https://www.financedigest.com/fintech-incubation-more-value-than-meets-the-eye.html "FINTECH INCUBATION: MORE VALUE THAN MEETS THE EYE") regulatory requirements.

**A seat at the table**

Harnessing disruptive [tech is at the heart of many a traditional bank’s](https://www.financedigest.com/how-can-banks-overcome-the-tech-trust-gap.html "How can banks overcome the tech trust gap?") business strategy, which means the door is wide open for FinTechs to establish new, symbiotic partnerships. To build confidence and get that seat at the table, FinTechs will need to showcase their understanding of how to develop technology at pace, demonstrate their inherent understanding of the digital consumer and customer journey, while acknowledging the benefits their traditional [bank partner brings](https://www.financedigest.com/visionary-banks-fight-the-blur-hybrid-computing-architecture-brings-a-faster-sharper-customer-experience.html "Visionary banks fight “the blur”: Hybrid computing architecture brings a faster, sharper customer experience") in stakeholder management, compliance, change management and quality.

We all know business integration isn’t easy – but get it right and the rewards are worth it. In financial services, it’s a case of ‘if, not when’ we’ll see an industry-shaping product or service born out of a partnership between FinTech and a traditional [bank dominate the market](https://www.financedigest.com/market-stress-indicators-react-sharply-after-u-s-bank-failures.html "Market stress indicators react sharply after U.S. bank failures").


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---