# How Partnerships Fuel Fintech Innovation and Help Banks Deliver a Better Customer Experience
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-09-27
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: The Future of Banking: Driving Innovation Through Partnerships
Meta Description: Discover how partnerships between fintech and traditional FIs are driving innovation in banking, offering customers a wide range of innovative products and
URL: https://financedigest.com/how-partnerships-fuel-fintech-innovation-and-help-banks-deliver-a-better-customer-experiencehtml

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_By_ **_Shawn Conahan,_** _Chief Revenue Officer,_ [_Wildfire Systems_](https://www.wildfire-corp.com/)

It is an exciting time to be in the financial services industry as we witness a massive paradigm shift away from “back office” banking functionality measured in metrics like total deposits to a more customer-centric definition of banking that includes innovative products and measurement of engagement and loyalty as top metrics.

As a banking customer, I absolutely love the vast array of products available to me today, and I marvel at how quickly many of them have come to market. It seems like only the [past five years](https://www.financedigest.com/big-banks-want-survive-past-next-10-years-need-adapt.html "If the big banks want to survive past the next 10 years, they need to adapt") or so has been responsible for the majority of the shift we have seen. Customers now have virtual wallets, NFC, BNPL, crypto, [financial management](https://www.financedigest.com/use-case-centric-data-management-why-it-is-the-future-of-data-management-for-financial-institutions.html "Use Case centric data management – Why it is the future of data management for financial institutions"), and loyalty products – just to name a few – at their fingertips.

The biggest factor fueling this innovation is the massive amount of investment in the fintech sector, and the ensuing ability of those fintech companies to capture the imagination of consumers to make their [banking 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") better. More importantly, those fintech companies have brought their innovation to [market](https://www.financedigest.com/2021-and-the-fintech-market-bonanza.html "2021 and the fintech market bonanza") largely through partnerships with other fintechs as well as with financial institutions (FIs). The [financial services](https://www.financedigest.com/devops-the-secret-tool-thats-transforming-financial-services.html "DevOps: The Secret Tool that’s Transforming Financial Services") industry is now a true ecosystem of partnerships, where all ships are rising with the tide.

While [business imperatives for growth certainly drive the industry’s appetite for partnerships](https://www.financedigest.com/types-of-business-partnership.html "Types of business partnership"), also remember that consumers are an equally important factor because as consumers we want simplicity, and we want value. Put another way, [consumers say they want the innovation](https://www.financedigest.com/2021-predictions-less-fraud-shifting-consumer-behaviour-and-accelerating-pace-of-innovation.html "2021 predictions: less fraud, shifting consumer behaviour and accelerating pace of innovation") that fintechs provide, but they would prefer to have it from their primary bank. For instance, in their Q1 2022 Payments Report, the Auriemma Group [asked](https://www.linkedin.com/posts/auriemma_capitalone-capitaloneshopping-wikibuy-activity-6940377142023110656-I1cB?utm_source=share&utm_medium=member_desktop) consumers the “Likelihood of Installing Browser Extension Similar to Capital One Shopping” of which  53% of consumers answered “Somewhat likely” or “Very likely.”

When asked “Likelihood of Installing Browser Extension Similar to Capital One Shopping if [Offered](https://www.financedigest.com/first-abu-dhabi-bank-reiterates-not-eyeing-offer-for-standard-chartered.html "First Abu Dhabi Bank reiterates not eyeing offer for Standard Chartered") by Primary Bank,” that number shot up to 66%.

[**Partnerships Drive Go-To-Market Strategies**](https://www.financedigest.com/impact-com-partners-with-norsk-tipping-to-drive-a-sophisticated-partnership-strategy.html "impact.com partners with Norsk Tipping to drive a sophisticated partnership strategy")

The response by traditional [banks](https://www.financedigest.com/building-the-bank-of-you.html "Building the Bank of You") then becomes a “build vs. buy vs. partner” analysis, and partnership seems by far to be the preferred go-to-market strategy. It enables large FIs to leverage the trusted relationship they enjoy with their customers while integrating the [innovative](https://www.financedigest.com/knowing-your-customers-needs-is-essential-for-banking-innovation.html "KNOWING YOUR CUSTOMERS’ NEEDS IS ESSENTIAL FOR BANKING INNOVATION") products churned out by startups in the fintech sector to further delight an already loyal customer base. This synergistic approach is highly appealing to both [fintech and traditional](https://www.financedigest.com/fintech-inertia-consumers-not-unhappy-with-traditional-banks.html "Fintech inertia: consumers not unhappy with traditional banks") FIs alike. The former gets access to a customer base that otherwise would have been prohibitively expensive to acquire, while the latter gets access to [technology that would have been prohibitively expensive to develop](https://www.financedigest.com/financial-services-technology-development-in-2023.html "Financial Services technology development in 2023"). They both [share risk](https://www.financedigest.com/asia-shares-weigh-china-risks-yen-hits-6-month-high.html "Asia shares weigh China risks, yen hits 6-month high"), of course, but they also share the reward of the value they create together.

The partnership trend is a significant one, and thought leaders in our [industry are paving the way](https://www.financedigest.com/5-ways-the-fs-industry-can-support-the-recovery.html "5 ways the FS industry can support the recovery") to increased innovation through partnership. One of the most influential investors in the fintech sector, QED Investors, recently co-authored a paper with one of the most trusted consulting firms in the [financial services sector](https://www.financedigest.com/financial-companies-delivering-better-value-for-customers-in-loyalty-programmes-compared-to-other-sectors.html "Financial companies delivering better value for customers in loyalty programmes compared to other sectors"), the Boston Consulting Group. The [whitepaper](https://www.qedinvestors.com/blog/whitepaper-best-practices-in-bank-fintech-partnerships), published in  April 2022, is entitled “Matchmaker, Make Me a Match – Best Practices in bank-fintech partnerships.” In it, the authors help to demystify the bank/fintech landscape and provide some structure to the evolution of the industry we are seeing by segmenting the fintech sector into “Enablers,” “Adjacent Competitors,” and “Direct Competitors.”

While Enablers like Plaid have a fairly straightforward value [proposition in that they help banks](https://www.financedigest.com/rethinking-retail-banking-embracing-a-customer-centricvalue-proposition.html "Rethinking retail banking: Embracing a customer-centricvalue proposition"), and as does direct competitor PayPal in that they do what banks do, it is perhaps the adjacent competitors like Stripe or Shopify that are the most intriguing potential partners because they do what banks _could_ do. A partnership here could look like a white-label arrangement, with the added charm of [creating enough value](https://www.financedigest.com/creating-sustainable-value-through-responsible-investment.html "Creating sustainable value through responsible investment") to dissuade the adjacent competitor from becoming a direct competitor.

In any case, fintech [leaders know that achieving success](https://www.financedigest.com/young-leaders-forum-debating-what-successful-leadership-looks-like-in-the-digital-age.html "Young Leaders Forum, debating what successful leadership looks like in the digital age") solely on their own can be very expensive and take a long time. In the [face of a cooling investment](https://www.financedigest.com/analysis-rocket-startups-face-adapt-or-die-moment-amid-investment-drought.html "Analysis-Rocket startups face adapt-or-die moment amid investment drought") environment, there is little doubt that partnerships, when executed properly, are a way to accomplish their goals faster. Similarly, [banks understand that to make the investments in technology](https://www.financedigest.com/6-technology-trends-banking-2019.html "6 Technology Trends for Banking in 2019") required to stay competitive would be risky and more likely simply impossible. And so here we are, in a rapidly evolving industry that has turned into an [ecosystem of partnerships bringing unprecedented innovation](https://www.financedigest.com/transforming-the-retail-banking-ecosystem-its-all-about-technological-innovation.html "TRANSFORMING THE RETAIL BANKING ECOSYSTEM: IT’S ALL ABOUT TECHNOLOGICAL INNOVATION") to market.

The ultimate winners? Banks for sure; fintechs certainly.

But more than any other participant in this ecosystem, the consumer wins the most.

**_About the author:_**

_At Wildfire, Shawn develops strategic partnerships with major finance, banking, and fintech companies to enable the creation of new revenue streams and modernizing their [customer experience](https://www.financedigest.com/insurers-ready-to-fight-back-against-poor-customer-experience.html "Insurers ready to fight back against poor customer experience") to position them competitively for the future of banking and money. He has been an entrepreneur, senior executive and investor in the wireless, technology and [Internet industries for over 15 years](https://www.financedigest.com/2017-the-year-of-the-internet-of-some-things.html "2017 – The year of the Internet of ‘SOME’ Things"), having previously built and sold three companies. His industry experience ranges from [digital media to wireless technology](https://www.financedigest.com/you-cant-get-faster-than-that-spring-statement-update-delivered-digitally-as-it-happens-with-app-driven-technology.html "‘You Can’t Get Faster Than That’ – Spring Statement Update Delivered Digitally As It Happens with App-driven technology") to big data where the common thread has been building platforms with broad applicability._


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