Growth in Bank-Fintech Partnerships, Examples and Evolving Models (2023)

by InnReg on March 25, 2022

The stats clearly demonstrate the rapid adoption of bank-fintech partnerships in the financial services industry over the last few years.

According to a 2019 PWC survey, 42% of banks engaged in joint bank-fintech partnerships, a figure that more than doubled to 94% of financial services companies expressing confidence that fintechs would help grow their company’s revenue over the coming years.

While banks frequently viewed fintechs as a threat in the early days, many of them today are finding that bank-fintech partnerships actually help them flourish.

For fintechs, partnering with banks represents a promising opportunity to build mutually beneficial cooperation, expand their geographical presence, and mitigate the compliance burden.

Why Should Banks and Fintechs Partner?

The fintech industry has brought ever greater competitive challenges and disruption for banks, particularly community banks. Fintechs often offer better services when it comes to online banking services. At the same time, community banks have relationship experience and compliance know-how that can bring benefits in partnership with fintechs building innovative financial solutions.

The digital economy has increased customer expectations, and banks of all sizes across the globe are reacting by automating their processes. Banks are also shifting their customer acquisition and retention strategies from expanding their branch system to creating technically sophisticated services such as mobile banking.

Community Bank-Fintech Partnerships

In this context, it comes as no surprise that regulatory bodies have shown more interest in the role that innovation plays in the financial sector. Therefore, they are closely considering compliance and due diligence requirements in bank-fintech partnerships.

This interest culminated in new guidelines jointly released in August 2021 by the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency (collectively, the “Agencies”), intended to help community banks conduct due diligence on fintech companies.

While the Guide specifically addresses “community banks”— defined as banks with $10 billion or less in consolidated assets supervised by one of the Agencies — the Agencies note that the fundamental concepts of the Guide may be useful for banks of varying sizes.

The Guide also applies to other types of third-party relationships as a source of due diligence best practices and as a preview of potential areas of future regulatory focus.

Overall, the guidelines provide a structured approach to due diligence for community banks. They offer especially useful guidance for banks with minimal prior experience partnering with fintechs. Moreover, fintech companies may also find the guidance useful in preparing for discussions with potential bank partners.

The Guide to Community Bank Due Diligence Focus Area

The due diligence for community banks should focus on these six areas:

  1. Business experience and qualifications. Operational history, experience, legal and regulatory actions, and strategic plans.
  2. Financial condition. Financial analysis of fintech's ability to remain as a viable business operation and market considerations.
  3. Information security. InfoSec framework, including documented and enforced data security controls, incident response, breach notification processes, and information systems programs and design.
  4. Legal and regulatory compliance. Organizational documents, licenses, registrations, legal permissibility of activities and products, regulatory compliance policies, marketing channels, and consumer complaints.
  5. Operational resilience. Business continuity planning, business resilience and incident response, and service level agreements.
  6. Risk management and controls. Effectiveness of risk policies, procedures, process, training, reporting, and general ability to align with the bank’s risk appetite, appropriate laws, and regulations.

These guidelines reflect the recognition that bank-fintech partnerships can be meaningful and beneficial in a number of operational areas and product types.

What are the meaningful and beneficial areas of bank and fintech partnerships?

  • digital and mobile payments and deposits
  • customer interface and experience technology
  • provision of money management and wealth management
  • expedited credit underwriting and loan origination processes
  • data breach and identity protection tools.

In turn, fintech companies can benefit greatly from the substantial pre-existing customer bases, market presence, and reputation of banks of all sizes.

What Are the Bank Fintech Partnership Models

Based on the scope of the relationship bank-fintech partnerships typically fall into one or more of the following categories:

  1. Referral partnership model
  2. Fintech as a vendor
  3. Private-label / White-label
  4. Hybrid model

Let’s look at what each model means:

Referral Partnership Model

The least direct relationship is a referral partnership. In this model, banks refer customers to a preferred fintech to supplement features the bank does not offer.

Fintech as a Vendor Model

In a more direct relationship, the fintech acts as a technology provider to deliver specific functions, specifically as a vendor.

Private Label / White Label

Similarly, a bank can choose to offer a fintech’s capabilities under a “private label” or “white label.” Such labeling typically involves banks creating their own products and services under their own brand or customizing a fintech product to remain invisible to the bank’s customers.

Hybrid Bank-Fintech Partnership Model

More recently, “hybrid” models have also become common in the industry, such as direct investment or acquisition, outsourcing services, or allowing the fintech to work with the bank to offer services such as lending and account issuance.

In each case, these partnerships create mutual responsibilities for ongoing operations, including compliance. It is important for both partners to carry out careful due diligence to ensure the right fit and ability to deliver.

Growth in Bank-Fintech Partnerships, Examples and Evolving Models (1)

What Are Bank-Fintech Partnerships Examples?

We would like to mention these five important recent examples of bank-fintech partnerships as of 2023:

  1. Tradeshift & HSBC
  2. Stripe & Goldman Sachs
  3. Revolut & Cross River Bank
  4. N26 & Wise
  5. Citi and IntraFi

Let’s look into these noteworthy bank-fintech partnerships that illustrate the huge benefits that could arise out of such collaborations.

Tradeshift & HSBC

Tradeshift, known as one of the world’s largest business commerce platforms, joined forces with HSBC to develop a simple digital platform. The platform enables businesses to manage their global supply chains and working capital requirements from any device. This successful partnership not only generates significant revenues for both parties, but also simplifies international trade processes.

Stripe & Goldman Sachs

Stripe is a well-known US fintech company facilitating payments for businesses by partnering with many major banks. For example, its banking-as-a-service API (i.e. Stripe Treasury) runs through its partnerships with Goldman Sachs and Evolve Bank & Trust.

Revolut & Cross River Bank

In April 2022, Cross River Bank entered into a partnership with British-Lithuanian neobank Revolut to deliver more affordable access to credit for US Revolut consumers. The partnership will open up the first US-based consumer personal loans for Revolut customers thanks to Cross River’s technology infrastructure

N26 & Wise

N26 is a German neobank headquartered in Berlin. N26 partnered with Wise, the global technology leader in international payments, to offer international money transfers in over 30 currencies.
This valuable partnership builds on a joint vision to disrupt the financial sector by making international money transfers easier and more transparent.

Citi and IntraFi

In 2022, Citi launched a new US deposit sweep solution through its partnership with IntraFi, known as the IntraFi Yankee Sweep. This product allows institutional clients with US accounts to sweep cash into demand deposit accounts at participating US branches of non-US banks.

What Are the Factors Driving a Greater Bank-Fintech Collaboration?

Five factors are driving further industry change and creating even greater need for bank-fintech partnerships:

  1. Mobile Adoption
  2. Remote Work
  3. Evolution of Community Banks
  4. Industry Collaboration
  5. Regulatory Modernization

We reviewed each bank-fintech collaboration factor in detail below.

Mobile Adoption

The rapid adoption of consumer technology like smartphones and smartwatches has created vastly different customer needs over the past few years. And, as the adoption rate for these devices increases, the need for immediate one-to-one access to financial services has increased as well.

As a result, banks and credit unions should look to fintech as a means to provide more services, much like the industry has done in the past.

Remote Work

A radical digital transformation took place across industries during the COVID-19 pandemic, as the shift to remote work created more opportunities to develop new products. This pivot uncovered challenges and pain points that likely would not have been assessed and resolved if not for the pandemic.

In fact, 88% of middle-market businesses, including banks, implemented new technologies within the last year.

Evolution of Community Banks

At a time when the four biggest commercial banks in the US controlled 36% of the industry (2018), digitization enabled community banks to remain independent.

For example, technology can improve decision-making by reducing the amount of time it takes to approve a loan while mitigating risk. Technology can help community banks process more loans, thereby increasing revenues while also reducing the time and cost of processing paperwork.

Industry Collaboration

How far is this collaboration trend going? PwC sees 82% of current financial service providers increasing partnerships within the next five years.

Competition between banks and new entrants may give way to direct collaboration across the fintech ecosystem, which should enable both parties to profit. Potential opportunities span from product design and development by start-ups to distribution and infrastructure capabilities by banks.

Regulatory Modernization

With this backdrop, it is fair to predict that in the coming years, the US government will continue to mature its regulatory approach, and indeed the OCC is already taking steps related to fintech. In a statement before the Federal Reserve Bank of Philadelphia’s Fifth Annual Fintech Conference in November 2021, Acting Comptroller Michael J. Hsu discussed modernizing the financial regulatory perimeter.

Hsu said: “Modernizing the bank regulatory perimeter cannot be accomplished by simply defining the activities that constitute ‘doing banking,’ but will also likely require determining what is acceptable in a bank-fintech relationship.” It is likely that with regulators thinking more and more about bank fintech partnerships, the US will follow existing trends elsewhere in the world.

Conclusion: Staying Ahead of Evolving Regulation Impacting the Future Model of Bank-Fintech Partnerships

Given the continuous evolution of the financial technology landscape, a bank’s access to and understanding of fintech will be critical to effectively meet the needs of its customer base. With appropriate risk management and compliance guardrails, bank-fintech partnerships present a notable opportunity for community banks to strengthen existing operations, particularly when the partnership serves the unique strategic objectives of both parties.

What is certain is that bank-fintech partnerships will continue to be a driver of innovation in the coming years as both sides strive to grow and engage their customer base to drive more revenue.

As we remain in a fast-moving space where guidance from industry and regulatory experts continue to inform and mold the business model, InnReg is well-positioned to provide support. If you have questions about your compliance requirements and preparation while regulation is still developing, we’re here to support you with practical guidance on compliance and risk considerations related to bank-fintech partnerships. As an outsourced compliance provider, we can help you with:

  1. KYC, AML, and Customer Due Diligence
  2. Suspicious Activity Reporting
  3. Fraud prevention
  4. Red flag programs
  5. Information security and data protection
  6. Marketing and advertising compliance
  7. Compliance governance and risk assessment
  8. Staff compliance and training

Topics: Lending Compliance


What is an example of a bank and fintech partnership? ›

Deutsche Bank + Traxpay

Thus, the bank partnered with Traxpay – a German fintech company that offers discounting and reverse factoring solutions for its corporate clients. This collaboration now enables the bank to play a leading role in supply chain financing across the globe.

What are the examples of banks using fintech? ›

The general examples of mobile banks, digital banking, and fintech have been creating new strides in the consumer banking sector. Some of the popular financial technology examples in consumer banking include Moven, Green Dot, and Netspend.

How banks are partnering with fintech? ›

In this type of partnership, banks use FinTech tools in order to improve the customer experience of their own banking products. This includes technology that improves the online account opening process, enhances their mobile banking experience, or simplifies money movement.

What are 3 examples of fintech? ›

Examples of fintech applications include robo-advisors, payment apps, peer-to-peer (P2P) lending apps, investment apps, and crypto apps, among others.

Which bank fintech partnership is most effective? ›

Vayana one of India's largest trade finance platforms, and Federal Bank, a leading Private Sector Bank, have been awarded the 'Most Effective Bank-Fintech Partnership: Agile and Adaptable' at the IBSi-Global Fintech Innovation Awards 2021.

What are 3 pillars of fintech innovation? ›

  • Capital Formation.
  • Credit and Risk Solutions.
  • Data & Distribution.
  • Economics & Country Risk.
  • Sustainability.
  • Financial Technology Solutions.

What are the four key areas of fintech? ›

Artificial intelligence (AI), blockchain, cloud computing, and big data are considered the four key areas of fintech.

Is Zelle a fintech? ›

Zelle is a product of Early Warning Services, LLC, a fintech company owned by seven of America's largest banks: Bank of America, Truist, Capital One, JPMorgan Chase, PNC Bank, U.S. Bank and Wells Fargo.

What are three examples of the largest best known fintech companies? ›

Biggest Fintech Companies In The World
  • SoFi Technologies, Inc (NASDAQ:SOFI) Market Cap as of November 18: $4.81 Billion. ...
  • Klarna. Estimated Valuation: $6.7 Billion. ...
  • Wise plc (OTC:WIZEY) Market Cap as of November 18: $7.53 Billion. ...
  • Robinhood Markets, Inc. (NASDAQ:HOOD) ...
  • Coinbase Global, Inc. ...
  • Nubank (NYSE:NU) ...
  • Chime. ...
  • Revolut.
Nov 22, 2022

Why are banks collaborating with fintech? ›

The Future of Collaborative Innovation

These collaborations will enable banks, fintech firms and other non-traditional providers to explore alternative products, methods of service delivery, and even revenue models, while providing a vastly improved and seamless experience for the customer.

What are fintech partnerships? ›

Fintech Partnerships is exclusive 100% Digital Banking Services for Millennials that offers interactive, personalised, and transparent banking experience. Gain access to a new-age savings account and money management tools with features that helps you to grow your wealth and organize your finance.

What is the impact of fintech on banks? ›

Compliance and Regulations

Banks cannot risk non-compliance with data privacy and security. But if vetted technically and through the right channels, traditional banks can utilize this in their favor- something where fintech companies would lag behind.

What is the role of fintech in banking? ›

For banking services, fintech's payment solutions are linked with the respective bank account of the user, and then the user can use the funds in the bank to make online payments for services available on the fintech app, such as ticket booking, bill payments, EMIs, and many more.

What are the top 5 trends in FinTech? ›

  • Data-driven platforms and automation. ...
  • AI-driven hyper-personalized customer experiences. ...
  • Payment diversity: Embedded finance, blockchain and crypto. ...
  • Risk management tech: Compliance, privacy and cybersecurity. ...
  • Quantum computing: The rise of the new fintech era.
Feb 7, 2023

What are the five FinTech trends? ›

Table of Contents:
  • List of 5 FinTech Trends with the impact on the Financial Industry.
  • 1.1. Digital Payments.
  • 1.2. Artificial Intelligence and Machine Learning.
  • 1.3. Blockchain Technology.
  • 1.4. RegTech (Regulatory Technology).
  • 1.5. Embedded Finance.
  • FinTech solutions developed by Railwaymen.
  • 2.1. CreateCoin.
Feb 24, 2023

What are the five elements of FinTech? ›

FinTech startups (e.g., payment, wealth management, lending, crowdfunding, capital market, and insurance FinTech companies);  Technology developers (e.g., big data analytics, cloud computing, cryptocurrency, and social media developers);  Government (e.g., financialregulatorsand legislature);  Financial customers ( ...

How can big banks compete with fintech? ›

One advantage that banks hold over fintech startups is that they know the keys to these rails through historical processs knowledge. Improving them will provide banks with efficiency gains that can be passed through to consumers via better pricing.

How fintech firms are challenging banks? ›

As fintech companies capture market share from traditional banks and other firms operating in financial services, they pose a potential threat to the stability of the financial sector by eroding profits and raising operating costs.

What are the 7 areas of engagement? ›

The 7 aspects of engagement (responsiveness, curiosity, discovery, anticipation, persistence, initiation and investigation) were developed in 2011 as part of a research project into children with complex learning difficulties and disabilities.

What are the 5 levels of the engagement model? ›

The model has 5 areas: exploration, realisation, anticipation, persistence and initiation.

What are the 5 types of engagement? ›

This article provides practical teaching and learning considerations for online educators based on these five factors.
  • Social engagement.
  • Cognitive engagement.
  • Behavioural engagement.
  • Collaborative engagement.
  • Emotional engagement.
Dec 7, 2022

What are the three stages of Fintech evolution? ›

The History of Fintech
  • Fintech 1.0 (1886 – 1967) This stage involves building the infrastructure that will support globalized financial services. ...
  • Fintech 2.0 (1967 – 2008) ...
  • Fintech 3.0 (2008-Current) ...
  • Fintech 3.5.

What are the key success factors for Fintech? ›

  • financial technology.
  • innovative success factors.
  • sustainable fintech.
  • interval-valued intuitionistic fuzzy set.
  • combined compromise solution.
Sep 1, 2022

What are the three dimensions in Fintech? ›

(2020) recommended the three dimensions of Fintech, which consists of (1) financial sector, (2) business model, and (3) technology.

What is the ABCD of FinTech? ›

The acronym ABCD stands for: A - Artificial Intelligence, B - Blockchain, C- Cloud Computing and D - Data, and it's associated with most offered FinTech services.

What are the 3 roadblocks to FinTech success in the USA? ›

The top three roadblocks stopping financial services firms from rolling out effective digital transformation strategies are the inability to keep pace with technological change, the lack of a roadmap for innovation, and the struggle to modernize IT infrastructure, according to a survey from financial technology ...

Which of the following is the top 3 FinTech categories? ›

These are the most popular types of fintech:
  • Digital banking.
  • Payment.
  • Trading and cryptocurrency.
  • Insurance.
  • Deposit and lending.
  • Capital raising.
Aug 29, 2022

What are FinTech partnerships? ›

Fintech Partnerships is exclusive 100% Digital Banking Services for Millennials that offers interactive, personalised, and transparent banking experience. Gain access to a new-age savings account and money management tools with features that helps you to grow your wealth and organize your finance.

Why are banks collaborating with FinTech? ›

The Future of Collaborative Innovation

These collaborations will enable banks, fintech firms and other non-traditional providers to explore alternative products, methods of service delivery, and even revenue models, while providing a vastly improved and seamless experience for the customer.

Should FinTech firms and banks collaborate? ›

Big Banks Can Benefit From Collaboration With FinTech Companies. Big banks can benefit from working with FinTech companies who offer niche products that improve the customer experience. For big banks, FinTech companies represent both a threat and an opportunity.

What are the 4 areas of FinTech? ›

Artificial intelligence (AI), blockchain, cloud computing, and big data are considered the four key areas of fintech.

What does FinTech mean in banking? ›

FinTech (financial technology) is a catch-all term referring to software, mobile applications, and other technologies created to improve and automate traditional forms of finance for businesses and consumers alike.

What does FinTech mean for banks? ›

The word “fintech” is simply a combination of the words “financial” and “technology”. It describes the use of technology to deliver financial services and products to consumers. This could be in the areas of banking, insurance, investing – anything that relates to finance.

What are the impacts of fintech on banks? ›

The fintech revolution has provoked important changes among banks. They have responded to the emergence of peer-to-peer lenders and fintech rivals by adopting digital innovations such as smart chips, biometric sensors, branchless banking, artificial intelligence and machine learning to protect against fraud.

How can banks benefit from fintech? ›

Banks can leverage this by taking a cue from fintech and focusing on improving their own customer experience. This can lead to better service for customers, and ultimately, increased trust and loyalty to the bank. In short, Banks can improve their services by adopting the customer-centric approach of fintechs.

How will fintech change the future of banking? ›

Fintech is making banking and financial services more streamlined and accessible. Through the use of technology users can take advantage of automation to speed up processes which previously a human would have managed.

What are the 4 different partnerships? ›

The laws of individual countries vary, but, broadly speaking, there are four major types of partnership agreements in the United States:
  • General partnerships. ...
  • Limited partnerships. ...
  • Limited liability partnerships. ...
  • Limited liability limited partnerships.

What are the three 3 kinds of partnership? ›

There are three relatively common partnership types: general partnership (GP), limited partnership (LP) and limited liability partnership (LLP).

What are the 5 types of partnership? ›

Here are five types of business partnerships with useful information about each:
  • General partnership. ...
  • Limited partnership. ...
  • Limited liability partnerships. ...
  • Public private partnerships. ...
  • Limited liability limited partnerships.
Sep 30, 2022


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