Editorial

Promising future for bank – fintech collaborations

When fintechs first began to appear ten years ago, born out of the maelstrom that was the Great Recession, they were seen almost purely in terms of their potential for taking away business from banks.

Payments has proved an especially strong hunting ground for them versus the banks, especially with retail end solutions for cross-border transfers, micropayments and card payments, where incumbents have accumulated the most glaring shortcomings, often resulting in inefficient and overpriced products.

It’s arguably been tougher going for fintechs in providing solutions for corporates due to the higher barriers to entry but that hasn’t stopped them tackling the space with gusto, particularly across corporate payments, working capital management and peer-to-peer lending.

In recent years though banks and fintechs have grown to recognise that there are considerable merits in their working more closely together through collaborations and formal partnerships. As our article on fintechs and banks in this issue shows, after years of warily circling each other, both now recognise each other’s strengths, with agile fintechs contributing innovative platforms and solutions, and banks the equally important client relationships, global footprints and regulatory and licensing expertise and know-how.

There is an awful lot of mileage left yet in the two parties working together to provide novel solutions for existing retail and corporate pain points. But, as we note in this issue, what might cement the relationship between the two even more going forwards is the relatively new and fast-growing phenomena of multi-sector collaborations that have begun to pop up globally. These are webs of collaborating and competing firms that offer connected products and services and include the industrial ecosystems forming around autonomous vehicles, connected cars and car sharing services.

Another example is Microsoft and the BMW Group launching last month an initiative aimed at speeding up innovation in the manufacturing sector and making it more cost-effective. Their “Open Manufacturing Platform” is designed to break down barriers caused by proprietary systems, and to create an open technology framework backed by a cross-industry community.

The future, it seems, will be co-created and as such could open up many new, rich opportunities for banks and fintechs to tap into. With such a win-win proposition to aim for, it will be surprising if we do not see an acceleration in collaborative efforts.