Fintech partnerships: How financial corporates can innovate alongside startup partners

Fintech partnerships are one option for banks and other financial institutions that are looking for ways to innovate. 

Often, established corporates don’t have hands-on innovation experience or expertise in-house. By collaborating with fintech (“finance technology”) startups, they can access that specific know-how and experience without building an internal team themselves. 

I’ve worked in innovation management for decades, most recently as an innovation strategist for Credit Suisse. I now work as a Partner Innovation Lead at Tenity, so I have hands-on experience of the entire innovation lifecycle in financial services corporates and startups.

In this guide, I show you how banks and financial corporates can get started with fintech partnerships. I cover:

1. Four key types of fintech partnerships
2. Tips to enable a successful fintech partnership
3. Three examples of successful bank-fintech partnerships

‍Is your corporate interested in innovation partnerships? Get in touch with Tenity to find out how we can help. 

Four key types of fintech partnerships

At Tenity, we help financial corporates learn about and collaborate with fintech companies. We do this through accelerator programs and innovation workshops, where established financial institutions can partner with fintechs to solve their mutual innovation challenges.

In our experience, there are four types of fintech partnerships that corporates engage in, which differ in levels of commitment and risk. 

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1. Free pilot: Experimenting in a low-commitment, low-risk partnership

The first type of fintech partnership that we facilitate at Tenity is a free pilot. It has the lowest level of commitment and risk of all these partnership types, as there is no paid interaction involved at all. 

Simply, free pilots bring together fintechs and corporates for low-cost and low-risk experiments. These typically happen through accelerator programs such as those we run at Tenity, where startups and established banks can explore ideas together during a 3 or 6 month program.

From the corporate’s perspective, the primary purpose of free pilots is to identify the corporate’s problem and assess whether a startup can help solve it. 

When a free pilot is successful, corporates and fintechs can establish a potential use case. Then, they can take that idea forward to the next stage of the partnership: a paid pilot. 

2. Paid pilot: Testing products with a proof of concept

A paid pilot is a proof of concept (POC). It involves much more rigorous testing of a single product idea to assess whether that idea can be validated.

Typically, in this type of partnership, more resources are committed by both the corporate and the startup. For instance, corporates would need to define a budget and, in some cases, provide access to their data, internal expertise, contacts, and even customers. Meanwhile, startups would often need to deploy developers and tech resources that can support a solution.

Inevitably, greater commitment means greater risk, for both parties. That’s why before they enter into this partnership, fintechs and banks need to negotiate terms, agree goals, and decide a timeframe.

This kind of partnership usually lasts between 8 weeks and 6 months—a period of intense testing and validation. However, if it’s successful, it can end with the corporate becoming the startup’s paid customer, or with the two parties agreeing to a joint venture.

3. Joint venture: Bringing products to market together

A joint venture is when the bank and fintech begin to truly work together as partners. It may involve them collaborating to develop more products and services together, or they could enter into a revenue-share agreement. 

There are substantial benefits for both parties here. Corporates get access to tech expertise, innovation experience, and in many cases new technology itself. Meanwhile, startups can use the partnership to get deeper market access and grow their customer base. 

On the other hand, such a partnership can expose corporates to reputation risk. But if the partnership is a success, it can end with the corporate acquiring or investing in the fintech startup. 

4. Acquisition or investment: Gaining strategic influence to startups

The final kind of partnership is when the corporate either buys out the fintech partner entirely, or becomes an investor with a strategic influence over the startup.

In either case, the corporate has continued access to the startup’s expertise, knowledge, and technology, but they have much greater control over how it’s run. 

At Tenity, we can also help corporates decide whether they’re interested in acquisition or investment. We’ll help guide your innovation thesis, enable you to understand whether a startup is the right investment, and support you in getting strategic ROI from your investment.

Read more: Fintech funds: Learn about Tenity’s fintech-only fund

Tips to enable a successful corporate and fintech partnership

As a corporate, you’ll have specific goals you want to achieve through your fintech partnership, as well as your own ways of working, rhythms, and preferences. 

In the same way, the startups you partner with will have their own goals and approaches too. A successful partnership will be one that lets you align your sometimes conflicting approaches.

In our experience, only 28% of bank-fintech collaborations are successful. Such a high rate of failure is due to common obstacles that often plague these partnerships:

• Lack of internal buy-in, commitment, and resources
• Lack of strategic clarity and agreement on goals
• A failure to identify what success would look like and a failure to measure it
• A problem of attitude, in which corporates can treat startups simply as free consultants.

While there are many parts of the process that can go wrong, when these partnerships are successful, they bring enormous value to both the corporate and the startup.

With that in mind, in this section, I share four tips and strategies to increase the chances that your bank-fintech partnership will be a success.

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Ensure shared partnership goals align with your wider innovation strategy

From the beginning of your collaboration, your corporate and the startup need to agree on what you want to achieve. This needs to be expressed in concrete and feasible goals, that account for the timeframe and budget that you’re prepared to commit.

From the corporate’s perspective, these goals need to be aligned to your innovation strategy more generally. For instance, if your broader focus for the next year is generative AI, look for and partner with startups that are solving problems in that specific area.

Another essential consideration here is whether now is the correct time for you to realise this particular strategy. Are you behind the curve when it comes to developing gen AI products? Is there another trend that you would benefit from investing in? Similarly, you’ll need to assess broader factors too, including the economic climate.

Creating your own innovation strategy is hard enough. But the startups you work with will have their own goals and business models. Finding alignment will be a contributor to success.

Secure internal buy-in for your goals with a partnership sponsor 

An important part of assessing your strategy and establishing your goals will be to clarify whether these goals are best achieved through external partnerships or other means. Financial technology partnerships are not right for every use case and corporate, and they’re not the only way for you to innovate.

Instead, ask yourself whether these goals can be achieved with your existing internal resources. If yes, you may need to examine whether you need to go further with a given partnership at all.

If an external partnership is the right choice, though, you’ll need to get buy-in for it from your internal teams and leaders. When solutions are not developed in-house, there can be huge resistance and skepticism about them—and for a successful partnership, this needs to be overcome.

Similarly, leaders may view these partnerships as side projects and so may not allocate sufficient resources or time to them. Bear in mind that the startup with which you’re working will want to be certain that they have a stable partnership, backed by sufficient resources.

One way to deliver this is with a partnership sponsor. The right sponsor will have budget and decision-making controls or, if not, will know how to access a budget. They’ll have a track record of success in this—and they should be able to help the partnership overcome any internal politics.

Allocate sufficient resources, time, and governance processes

On a related point, having access to the right resources is essential for bank and fintech relationships, as they underpin the scope and feasibility of any project. At the same time, having the right governance processes in place will ensure it stays on track.

In practical terms, resources means funding, people, and time:

• Is sufficient funding available for the POC, and for the startup to experiment fully on the product? 
• Are the right people leading the project? Do they have the right expertise, from a technology and regulatory perspective? And, if they leave, will the partnership endure?
• Do the people involved in the partnership have access to SMEs who can inform the POC?
• Are meetings regular enough and of the right cadence for successfully implementing work and communication? Bear in mind that these meetings may need to be different to your corporate’s normal processes.
• Have you allowed enough runway to meet your goals?

Even after passing the POC phase, 50% of products fail to go live. This is often because traditional bank partners don’t have as much experience with APIs and other technology—and that lack of experience can be fatal.

As a corporate, request a visual roadmap or an FAQ from the startup. It can also be helpful to work with a single point of contact, assigned by the startup to manage the relationship.

Use innovation KPIs to measure your partnership’s success

Finally, how will you know if you’re on track to achieve the goals you’ve set with the startup? And how will you understand when you’ve achieved them?

Throughout the entire process, diligently measure your progress using innovation KPIs and metrics. For instance, they can measure:

• The quantity and quality of experiments. How many tests are you running? And for instance how many insights are you gaining from each one?
• The speed with which ideas move through the innovation funnel. For instance, how long does it take for an idea to go from an initial test to a POC? This will help you establish whether you’re on track to meet your goals.

In most cases, there will also be measurements you need to take that will be specific to your industry or product. In the case of AI, for example, you may be aiming for a particular level of efficiency gain. As such, it can help to define how much time a user will save by using your tool rather than doing it themselves.

Three examples of successful bank-fintech partnerships

At Tenity, we specialise in facilitating fintech partnerships by helping corporates learn about, collaborate with, and invest in finance startups.

To finish this article, I want to share three examples of successful partnerships that we’ve been involved in, including free and paid pilots, as well as an acquisition.

Datia and Julius Baer: Co-creating sustainability reporting services for wealth managers

For a number of years, we’ve been working with the wealth management bank, Julius Baer, on their innovation strategy and execution. Alongside developing their Web3 accelerator focused on customer experience and digital banking, we’ve worked with the bank to find partnerships with startups in sustainable finance.

As part of this work, we ran a custom accelerator for Julius Baer, involving the Swedish sustainable finance startup, Datia. Datia helps banks to analyze and disclose their portfolio’s ESG exposure in a transparent and sustainable way—and so, they’re a perfect match for Julius Baer.

Initially, Datia and Julius Baer partnered through a free pilot. Then, through a POC, they developed together a sustainability reporting service for wealth managers. Following that, the two companies became long-term partners.

Deedster and bLink: Collaborating on a CO2 footprint calculator

bLink is a part of SIX, the Swiss Stock Exchange. It’s SIX’s open banking platform, linking banks and fintechs in Switzerland. Their goal has been to identify and integrate new API-based banking services. And, with ESG emerging as a top priority among banking clients, bLink wanted to innovate in this space.

At Tenity, we connected bLink with Deedster, a Swedish climate fintech that focuses on creating climate impact and awareness using data-driven technology. We helped this successful partnership to happen through 3 main steps:

• Selection. For bLink, we scouted and curated startups offering API-based fintech solutions that matched bLink’s needs.
• Facilitation. Deedster joined our Open Innovation Program, allowing bLink to explore Deedster’s offerings in a free pilot.
• Collaboration. Together, bLink and Deedster developed a CO2 footprint calculator specifically for the Swiss market.

This collaboration led to a successful POC that used real-life data to inform their API-based solution. bLink’s banking clients can now provide added value to their clients, while Deedster can benefit from bLink’s network and accelerated market entry.

Find out more about the partnership here.

Cembra and Byjuno: Achieving a strategic goals through startup acquisition 

Finally, Cembra is a leading Swiss lender and provider of financing solutions and services, offering consumer credit products such as personal loans and auto leases and loans. 

In November 2022, the Swiss bank acquired Byjuno, a payment services and cash management solutions provider. Cembra’s goal was to combine Byjuno with its existing subsidiary, Swissbilling, to create a leading provider of invoice payment solutions. 

This acquisition was part of Cembra’s wider strategy of expanding into embedded finance solutions and Banking-as-a-Service (BaaS), with payment and financing options directly integrated into partner and customer journeys.

To deliver on this strategy further, Cembra is now becoming a corporate partner of Tenity, so we can help them access other startups such as Byjuno.

Build your own fintech partnerships alongside Tenity

Fintech partnerships enable corporates to access specific finance expertise and technology, without having to bring that knowledge in-house. Yet the biggest challenge is executing on that partnership and helping it succeed for both parties. 

At Tenity, we help corporates learn about, collaborate with, and invest in fintech startups that are working on relevant problems. 

Whatever stage of the innovation journey you’re at, we enable you to gain insights into the fintech ecosystem. And when you’re ready to collaborate, we can provide strategic guidance to help your collaboration become a success.

To learn more about Tenity and how we can help you with your innovation, reach out to us.