Forbes Thinks Banks Will Stop Partnering With FinTech Companies in 2024
This Forbes article details several reasons why banks will stop partnering with FinTech companies, including insufficient personnel, insufficient organizational structure, and lack of partnership competency. True, small banks do not have the resources to manage FinTech partnerships and large banks with the resources do not need the FinTech companies.
The most persuasive reason given by the article is that the relationships are more akin to client-vendor instead of partnerships. The article correctly notes that the term “partnership” means shared risk and reward. This isn’t the nature of most bank-FinTech relationships, however—banks purchase or procure technology and services from FinTechs.
Going forward, banks should:
1) Refocus “innovation” efforts on tangible process improvement and revenue creation. Banks need to find and select vendors who help them operationalize process change and new product/service creation.
2) Change vendor selection criteria. Vendors’ innovation capacity needs to become a more important component of selection criteria. Filling gaps in features and functionality is easier than helping banks innovate on processes and products.
3) Make data-driven vendor decisions. Banks need a more data-driven view of whether FinTechs are delivering on their promises.
Prediction: By the end of this decade, bank-fintech partnerships will be a thing of the past.
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