The relationship between banks and financial technology companies (fintechs) is complicated because both types of companies often compete with each other to expand their businesses and attract more customers. However, many banks and fintechs realize that it might be better to strategically work together.
This mutual cooperation is rarely straightforward, though. It’s more like “co-op-etition.” If you're managing a bank, you might be collaborating with one or more fintech companies, but you’re also competing with them at the same time – and vice versa.
Any bank and fintech partnership inherently creates risk. These risks might be different than a more traditional vendor relationship, such as nuanced data privacy, information security, and regulatory compliance risks, which can make the relationship even more complicated. But the mentality doesn’t need to be adversarial. Banks and fintechs can overcome their challenges and enjoy mutual benefits by aligning strategies, embedding operational excellence, and taking an integrated approach to risk management.