Bank and financial technology companies have been pitted against each other as bitter rivals throughout the years, but the two are finally coming together on products and services that can better serve customers.
In fact, a recent survey from Cornerstone Advisors found that financial institutions are making fintech partnerships a key priority in 2020, with 65 percent of banks and 76 percent of credit unions saying these partnerships will be an important part of their business strategies this year.
"Banks and credit unions are acknowledging that FinTechs often have better design capabilities than what exists at banks or their major industry vendors," Cornerstone Advisors President and co-founder Steve Williams says in the report. "They see partnering as very much a chance to 'bolt in' a better customer experience to their legacy back end in a time frame that can allow them to stay competitive."
In order to rank some current partnerships, media company Tearsheet launched its Bank/Fintech Partnership Awards earlier this year. As part of the process, it was able to gain key insights into different types of collaborations between banks and FinTechs, including what is working for banks and how FinTechs are helping these financial institutions better serve their customers.
Through conversations with both parties, Tearsheet was able to determine the key reasons why banks and Fintechs are partnering up. The four biggest factors include consumer demand and higher expectations for better technology; banks’ openness to collaboration with the FinTech community; banks creating innovation programs to gather information and technology from FinTech startups; and B2C Fintech firms pivoting to B2B.
As for which partnerships seem to be thriving the most, the collaboration between Marqeta and Sutton Bank won Tearsheet’s “Overall Winner.” Over the past nine years, as Marqeta has serviced some of the world’s largest companies, Sutton Bank has become closely integrated with the Marqeta platform and is now one of the largest issuers in the country.
Mastercard and Signzy were awarded the “Best Costumer Journey” award, which decreased the cost of merchant onboarding by 80 percent and reduced onboarding time by 75 percent. In addition, Midwest BanckCentre and MANTL received the award for “Digital Transformation” after the duo worked together to create a digital-only brand, Rising Bank, which hit its one-year deposit raising goal of $100 million in just five months. Bank of America and Zelle claimed the “Payments Award,” with p2p payments growing through Zelle by Bank of America customers from 51.6 million in 4Q 2018 to 95 million in 4Q 2019. And Wells Fargo and The Climate Service were given the “Social Impact” award for helping one of the largest U.S. cities assess the impact of climate change on its affordable housing resources.