Banking Fintech

Optimising the bank-fintech relationship

Optimising the bank-fintech relationship. Photo:,
Written by Daniel Latimore

Daniel Latimore provides four expert tips for exercising the ‘collaboration muscle’ when it comes to developing the relationship between banks and fintech.

At Celent, we’ve long said that banks must become better at partnering. Fintechs have come around to the realisation that it’s going to be the rare beast that can compete head-on with incumbent financial institutions. Most will fare better by figuring out a way to cooperate with them instead.

Eastern Bank, Celent’s 2016 Model Bank of the Year, took this idea one step further by building Eastern Labs within the bank – an in-house fintech. While most institutions won’t be able to replicate this (it’s really hard!), there are nevertheless some lessons for banks as they consider how to best engage with smaller, nimbler firms. The diagram below shows the complementary strengths and weaknesses that banks and fintechs bring to a joint endeavour.

Strengths and weaknesses that banks and fintechs bring to a joint endeavour. Source: Eastern Model Bank; Celent

When they get together, some weaknesses of fintechs are mitigated (e.g., they now have access to data and a brand), while many of the disadvantages of a bank persist (e.g., slowness and risk aversion). Additionally, new complications arise: goals diverge, information may not be completely shared, the cultures are wildly different, and handoffs can be agonisingly slow.

Four collaboration lessons

So what are the lessons when a financial institution engages with a fintech? I would suggest concentrating on four key challenges:

  • Focus on individual goals to ensure that they’re compatible, even though they’ll be different.
  • Be as transparent as possible and build that transparency into processes from the beginning.
  • Recognise cultural differences and address them at the outset. Be be realistic about the challenges.
  • Set expectations about achievable timelines.

Although other complications will undoubtedly arise, partnering is a muscle that banks haven’t exercised much. With practice and training, that muscle will get stronger, and with enough dedication, it will play a vital role in propelling the bank to the next level.

READ NEXT: Want to innovate? Then collaborate!

– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Photo:,

About the author

Daniel Latimore

Daniel W Latimore, CFA, is the senior vice president of Celent’s banking practice and is based in the firm’s Boston office. Dan covers the banking ecosystem, digital and omni-channel banking, innovation, and core systems.

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