Collaborating with FinTech’s drives transformation and accelerates change


There are various ways for financial institutions to benefit from advanced technologies and business models provided by so-called FinTech’s. For those still hesitating to make the step, one approach is to start collaborating with FinTech’s that help them in a non-intrusive, incremental way thereby limiting business risks. For those who are more bullish, taking stakes in handpicked FinTech companies will be the way to go, albeit riskier. Whichever way, collaborating with Fintech’s will drive transformation and accelerate change.

The bank – FinTech collaboration is the way to go

Whereas most of the early FinTech talks spurred fears of so-called imminent disruption, a change in mindset occurred in 2017 as most FinTech’s realised that the shortest path to revenue generation is to partner with banks rather than compete against such established and trusted institutions. Over the last 2 years, multiple deals between banks and FinTechs have been announced demonstrating not only the viability but also the strategic importance of such collaboration. In the payments space, examples include Standard Chartered Bank’s and Santander’s investments in blockchain-based global payments network Ripple. In trade financing, examples include HSBC’s stakes in TradeShift and Kyriba as well as DZ Bank’s and DB’s stakes in TrustBills.

Whilst such “collaboration” comes as a change vs. the early days, it is actually not new at all. Financial institutions have been using third-party software solutions for the last 5 decades. What is really new with FinTech’s is that incumbent institutions can now easily take advantage of very advanced ways to drastically improve or, when desired, to re-invent their businesses. The “FinTech – Bank” deals led by some banks aim at taking bold moves to deliver serious growth opportunities. Making it happen is however easier said than done. Let’s focus on execution.

Options for banks to work with FinTech’s

To keep it simple, let’s consider two collaboration options as per Figure 1:

  • Option 1 – Incremental. In this first prudent approach, banks take advantage of FinTech propositions to improve or extend their existing and proven business models. Benefits for banks include incremental product enhancements, increased operational efficiency, reduced costs and improved user satisfaction. In this case, FinTech propositions are usually software solutions introducing technologies that co-exist with legacy systems. Collaborating with such Fintech’s is low risk given the absence of impact on existing business models and practices. Also, as some FinTech technologies integrate very smoothly in legacy environments using non-intrusive IT techniques, short time to market is to be expected on top of earlier listed benefits. This first option offers a path to major efficiency increases and product enhancements whilst minimising risks.


  • Option 2 – Radical. In this second approach, banks partner with FinTech’s who have invented and own a new business model. Banks do this when they realise important changes in client expectations and behaviours are happening and that business practices are being disrupted by Fintech’s. In order to embark on such FinTech adoption path, banks need to have a bullish ambition (1) to get into new markets such as additional geographies and/or underserved client segments and (2) to embark in new business models and practices (e.g., joining a market place). Such FinTech platforms usually aim at connecting all participants involved in complex business transactions, so as to enable specific features such as auctioning, multi-banking, escrow service, title registry, transaction tracking, … Assuming the bank’s risk appetite is as high as the RoI of the prospective opportunity, banks will consider taking a stake in their chosen FinTech partner. This helps them be part of the governance and benefit from growing valuation of the FinTech company itself. It sometimes offers dividend payments as well.


Figure 1 illustrates both “Incremental” and “Radical” options whilst Figure 2 provides more details on key differences between both approaches.

Figure 2. Key differences between both FinTech adoption options

Given the strategic importance of the matter, some banks started to industrialise the “Radical” approach. A recent example is Standard Chartered Bank’s new business unit called SC Ventures which will “lead digital innovation across the Bank, invest in FinTechs companies and promote rapid testing and implementation of new business models.”

Michael Gorriz, group chief information officer at Standard Chartered Bank recently stated: “As new technology continues to play an ever more important role in banking, there is a huge opportunity for us to promote more innovation, and at the same time develop and deliver digital solutions that work for our clients and for us.”

Whether favouring the Incremental or Radical approach, one business area where such Bank – FinTech collaboration delivers tangible and immediate benefits is related to Data Management.

Go “Incremental” with FinTech for data management … much value, no risk

As Alec Ross, futurist and author puts it in his recent book: “Data is the raw material of the information age”. Financial institutions that fail to take advantage of their client transaction data miss a huge opportunity to match emerging client needs. They ought to understand that data represents a new type of economic asset feeding top management decision making. As the nature of innovation is changing, data becomes a decisive factor in the success or failure of businesses.

McKinsey & Company also spotted the importance of data in a recent report including: “Big Data and advanced analytics will virtually affect every part of the economy, especially financial services”. Some banks are using analytics to gain an edge in a cutthroat environment—by improving risk assessment and predicting customer behaviour.

Collaborating with FinTech’s on data management is a low risk / high reward opportunity for financial institutions and market infrastructures. Data management technologies help address two major hurdles that all banks face today when trying to make use of their client data:

  • Access to the many legacy systems: many internal transaction processing systems make it difficult to extract data whilst the transaction information they hold is critical for both operational and business teams
  • Data uniformity across silos: there is no uniform view of client and transaction data as institutions have not aligned disparate data sources given the complexity of the task. Data aggregation and interpretation becomes either highly manual or impossible to achieve cost efficiently.

Some FinTechs do offer financial institutions advanced data management technologies to access, scan and interpret various data sources and data sets, and deliver on the Big Data priority.


McKinsey & Company: “Big Data and advanced analytics will virtually affect every part of the economy, especially financial services.”

INTIX helps financial institutions become data-centric organisations and help them transform their client transaction data into a strategic asset. With INTIX, data becomes accessible, comprehensible and intelligible.

André Casterman, chief marketing officer at INTIX: “Data management technology helps financial institutions increase the return on investment on their legacy systems. No need to replace them, absolute need to leverage their data.”


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