FinTechs and the financial industry: partnerships for success

Abstract

Purpose The challenge of innovation and digitalization leads financial institutions and FinTechs to cooperate with each other. Therefore, it becomes more and more important to understand the why of the partnering, as success depends on it. The purpose of this paper is to derive most important common and specific strategic cooperation rationales between financial institutions and FinTechs, which serves as a value adding guideline for both parties. Design/methodology/approach This study first derives from a literature review the collaborative motives between FinTechs and financial institutions. Based on these findings, eight in-depth and semi-structured interviews with experts were conducted, providing insights as well as grading the motives Findings Starting from the FinTech perspective, the most relevant partnership motives were found to be financial return, reputation and credibility. The access primarily drives these motives to additional customer acquisition channels and a reputational quality signaling of the FinTech products or services within the market. On the other hand, the most critical incumbent motives were shown to be customer satisfaction and business model innovation. From a corporate perspective, these motives mainly incorporate the opportunity to challenge, pivot and expand the existing business model while increasing customer satisfaction via additional innovative products or services. Starting from the FinTech perspective, the most relevant partnership motives were found to be financial return, reputation and credibility. The access primarily drives these motives to additional customer acquisition channels and a reputational quality signaling of the FinTech products or services within the market. On the other hand, the most critical incumbent motives were shown to be customer satisfaction and business model innovation. From a corporate perspective, these motives mainly incorporate the opportunity to challenge, pivot and expand the existing business model while increasing customer satisfaction via additional innovative products or services. Research limitations/implications From a thematical limitation perspective, the interviewee sample size is comparatively moderate-low and the candidates are primarily active on European markets. Therefore, the analyzed motives are limited to European strategic preferences and do not reflect all intercontinental collaboration positions. Further, the strategic collaboration rationale evaluation framework is limited to the financial industry. Thus, this framework cannot be directly applied to other sectors or even further startup segments within the economy. Practical implications From a practical perspective, this study provides a top-level overview and guideline of the least and most relevant collaboration motives from a FinTech and financial incumbent point of view. It supports both cooperative parties to improve potential strategic partnership negotiation outcomes. Originality/value In contrast to the previous, mainly bank-focused partnership research approaches, this study provides broader collaborative insight within the financial industry by gathering interview data from FinTech, insurance, bank and asset management experts. Furthermore, the derived framework has a practical usage in the collaboration process.

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