Creating Strategic Value through Financial Technology

CHAPTER 9Partnering with a FinTech Company

INTRODUCTION

Banks are starting to realize that they must develop a strategy that considers how to evolve, survive, and thrive as technology and financial services increasingly intersect. A recent survey from BankDirector noted that bank boards are focusing more on technology with 75 percent of respondents wanting to understand how technology can make banks more efficient and 72 percent wanting to know how technology can improve the customer experience.¹

For these reasons, a number of banks are seeking to engage in discussions with FinTech companies. The right combination of technology and financial services through a partnership has significant potential to create value for both FinTech companies and traditional financial institutions.

FinTech presents traditional financial institutions with a number of strategic options, but the most notable options include focusing on one or some combination of the following: building their own technology solution, acquiring a FinTech company, or partnering with a FinTech company. While we do not yet know which strategy will be most successful, we do know that discussions of whether to build, partner, or buy will increasingly be on the agenda of boards and executives of both financial institutions and FinTech companies for the next few years.

This chapter focuses on key considerations when contemplating a partnership between a traditional FinTech company and a traditional financial services institution—such ...