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Fintech and Cooperating with the Competition

More and more banks are joining forces with fintechs

While commercial banking executives have spent the past few years wondering if fintech firms provide them with stiff competition or the opportunity for an interesting joint venture, cooperation is certainly more in vogue at the moment.

In fact, 82% of banking executives expect to increase their fintech partnerships in the next three to five years, according to PwC’s Global Fintech Report (pdf). Fintechs offer banks a speedy way to test and launch innovative services without having to completely overhaul their costly IT systems, while banks offer fintechs capital, an expanded customer base, and an imprimatur of greater legitimacy.

Opportunity Abounds

To help bankers evaluate whether or not to partner with a fintech, there a number of recent collaborations and acquisitions that illustrate the range of cooperation possibilities.

  • Payments:

    1. Canadian Western Bank – PayFirma: CWB partnered with Payfirma to implement its PayHQ platform that allows merchants to accept credit card payments, manage transactions, and analyze data on their business. The platform also provides a customer leaderboard to show businesses which customers are most important to them.

    2. BBVA- Openpay: BBVA acquired Openpay, a real-time B2B payments platform in Mexico that has a network of more than 12,000 payment reception points. Openpay was a finalist in BBVA’s Open Talent FinTech competition.

  • Lending:

    1. BancAlliance – Lending Club: BancAlliance partnered with Lending Club to offer access to co-branded personal loans through the Lending Club platform. The partnership gives community banks and their customers access to the platform’s low cost of operations and the bank’s low cost of capital to reduce the cost of credit.

    2. SunTrust – FirstAgain: SunTrust acquired FirstAgain to enhance its capabilities in the direct online lending market. FirstAgain provides direct, unsecured loans to super-prime borrowers online through a completely digital origination, underwriting, and service experience.

    3. Regions Bank – Fundation: Regions partnered with Fundation to create a co-branded online experience that allows small business to speed up their loan application process. Through the Fundation platform, applications now take less than ten minutes to complete and loans can be funded in three days.

  • Blockchain:

    1. JPMorgan Chase – Digital Asset Holdings: JPMorgan Chase partnered with blockchain startup Digital Asset Holdings to reduce the time, cost, and complexity of their trading process.

    2. National Bank of Cambodia – Soramitsu: The National Bank of Cambodia teamed up with distributed ledger technology specialist Soramitsu to develop a new payment infrastructure that securely and quickly processes data, making it ideal for digital payments, contract administration, identity management, and supply chain management.

  • Treasury Management:

    1. Capital One – Bill.com: Capital One joined forces with Bill.com and Gusto to simplify cash flow for small businesses and integrate HR into their business processes. The collaboration will work with the bank’s existing suite of financial products and help to manage all aspects of cash flow and HR-related processes.

    2. KeyBank – AvidXchange: KeyBank partnered with AvidXchange to provide a software-as-a-service solution as part of KeyBank’s treasury management platform. The solutions replaces paper-based invoicing and payment processes with digital capabilities.

    3. BBVA – Holvi: BBVA acquired Holvi, an online business banking service. Holvi is geared towards entrepreneurs, and small and medium sized-businesses and provides them a range of business services (traditional banking, online sales platform, cashflow tracker, etc.) with integrated features that offers a one-stop-shop for businesses.

 

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