Integrating the ‘Troublemakers’: A taxonomy for cooperation between banks and fintechs

Abstract

The banking sector has been subject to fundamental changes as digitalization is enabling novel technologydriven banking services and is creating new customer demands. While banks face sluggish innovation processes, fintechs take advantage of the digital era, delivering customer-centric solutions. Although banks have realized that cooperation with fintechs is a key approach to foster innovation, they struggle to address the associated challenges. Yet, there has been very little research into this phenomenon, so as to establish best practices, because neither bank-fintech cooperation, nor associated and relevant characteristics have been evaluated. However, especially from an economic and financial perspective it is crucial to close this research gap to better understand how technology-driven organizations and cooperating with them reshapes the financial sector and therefore entire economies. Thus, we propose a theoretically founded and empirically proven taxonomy. Based on the literature, 136 real-world cases, and 12 expert interviews, our results suggest structuring and describing bank-fintech cooperation through 13 dimensions. Further, the empirical examination allows for the identification of prevailing cooperation patterns. Our findings contribute to theory development on fintechs, their integration into the banking sector, and the crossorganizational cooperation research area. This paper also has practical implications for both banks and fintechs, and opens promising avenues for future research.

Panel Econometric Analysis on Mobile Payment Transactions and Traditional Banks Effort toward Financial Accessibility in Sub-Sahara Africa

“…This is explained by the rapid diffusion of mobile payment in the region, which threatens the survival of traditional financial institutions [2,39]. Again, the recent collaborations between mobile payment operators and traditional banks making it possible for these banks to add dynamism to their offerings [8,47]. This is healthy for the financial ecosystem as seen in other continents because we expect not only collaborations between traditional banks and Fintech but also an expansion in traditional bank facilities, which is desirable for the overall development of the landscape.…”

“…Recent collaboration between Fintech start-ups and traditional banks is attributed to the potential threat of the more accessible mobile payment model. Third-party payment intermediaries can render the traditional card-based payment services of banks undesirable, since customers prefer easy, remote, and secured transacting [8]. According to Skan, Dickerson, and Masood [22], traditional banks choose to partner with FinTech start-ups to generate new ideas, which creates innovative services and products to keep the institutions competitive.…”

“…According to Skan, Dickerson, and Masood [22], traditional banks choose to partner with FinTech start-ups to generate new ideas, which creates innovative services and products to keep the institutions competitive. In the quest to stay competitive and reach more customers, traditional banks that depend on the conditions of partnership can become the major service provider, improve products and services using FinTech innovation, or own shares in a FinTech start-up in the form of investment [8]. So far, as value creation is concerned, Yao et al [23] found that, in China, the introduction and growth of third-party payment operators has impacted the e-commerce industry and has gone further to transform how traditional banks provide services to their customers.…”

“…The past decade witnessed high profile studies on the potential impact of mobile payments on financial inclusion and reducing poverty in the region [2,3,5], with seemingly little attention given to the efforts of traditional banks to improve financial accessibility beyond collaborations with FinTech operators in the form of acquisition, alliance, incubation, and joint ventures [6][7][8]. This continues to divide opinions on the relevance of traditional banks (aside from these collaborations).…”

Digital Transformation of Financial Sector and Challengies for Competencies Development

“…Anagnostopoulos believes that FINTECHs have reached the main channels of commercial banks through technology and innovation in the financial sector. B. Drasch [12] et al agree with I. Anagnostopoulos [11] that banks are struggling with innovation opportunities, while FINTECHs offer technology-enabled capabilities, thus disrupting the value propositions of classical banks.…”