It is a piece of conventional wisdom in the world of fintech – and startups more generally – that a sign of success is the new wave forming partnerships with the old guard. 

Partnerships signal success for a few reasons, so the logic goes. They show that the big established companies consider the challengers’ products to be mature enough to adopt as part of their own stable, for a start. They also arguably demonstrate that the upstarts have caused enough of a wave to prompt incumbents to partner up as a way of avoiding being made redundant: if you can’t beat them, join them. 

But it’s also viewed from another perspective. Observers argue that it’s good news all round – big companies like high street and investment banks get access to innovative, exciting new products that benefit not just from the smarts of their owners but the buzz that few dusty old banks can achieve organically. On the other side, startups get the resources, expertise, access and prestige that only massive, established, centuries-old can offer. 

A Wharton Business school piece elaborates on those points, saying: “As the finance industry grapples with what the next generation of banks and payment systems will look like, it’s clear that partnerships are a linchpin for riding the wave of change successfully, whether you’re a multibillion-dollar traditional bank or a startup looking to bring cutting-edge technology into the mainstream.”

That article quotes Denise Leonhard, head of global credit expansion, business development and expansion at Paypal, who highlights not just the opportunity of partnerships, but in fact their necessity. “We’ve built our infrastructure with all these different partners – payment networks, bank issuers … we’re all playing in a very messy soup,” she said. “What we’ve been building in the last 20 years has brought all of those partners together to make the infrastructure as seamless as possible and we’re still relying on that infrastructure.”

Pushing past partnerships

But some are pushing back on the received wisdom. Ron Shevlin, a fintech contributor at Forbes, argues that neither traditional banks nor fintech startups are well-suited to forging partnerships.

First, the banks. Shevlin argues that though big banks may have the resources to “identify, vet and enter into partnerships, they don’t have the flexibility to scale and operationalise them.

The converse problem exists for startups. They may be flexible internally, but they struggle to find the right partners and vet them in the same way that big organisations can. From a technical perspective, partnerships may also require integration into “core apps”, which can be a challenge for smaller institutions, Shevlin says. 

That’s the practicalities – there’s also the important issue of corporate culture. It seems like a bit of a ‘soft’ issue; something intangible that doesn’t really matter that much. But for anyone that’s interacted or worked with startups and big established banks, it’s clear that the difference is night and day, and that it affects everything about how the companies work.

Dr Louise Beaumont from Publicis. Sapient sums it up this way: “For banks, partnerships won’t generate the quantum leap they need to move beyond a decades-old, product-centric mentality to deliver next-generation financial services that consumers deserve. At best, they may gain a workable solution that squats awkwardly in the existing infrastructure and brand. At worst, banks will fail to deliver any noticeable difference to customers beyond a flurry of press releases.”


Shevlin argues that all this doesn’t mean that “banking industry participants” like institutions, fintechs, and vendors, “won’t be highly interconnected–they will be. But one-to-one partnerships won’t be the predominant form of connection.” Instead, he argues, the most prevalent ways to connect will be through platforms, open banking, banking-as-a-service and “alliances and consortia”. 

For those working in the digital industry, these are considerations that can be applied day to day, either on the commercial or technical side. Is a full-on partnership necessary, or something a little less formalised? Can a startup work directly with a big established company, or are the two best off at arms-length? And perhaps most importantly – where is it best to work?

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