Evolution in the financial sector is happening at an unprecedented rate. Consumer behavior and how we manage our money are changing, shaped by technological advancement and access to information. Collaboration for fintech companies is key to success in this rapidly changing landscape.

In the past, traditional financial institutions (FIs) have been the primary financial services providers. However, with the rise of digital-first companies and the ubiquity of mobile devices, a new generation of financial technology companies has emerged to provide innovative solutions to customers. Let's look at how to monitor competitors and some of the reasons why collaboration, not competition, is key for fintech companies.

What Is Fintech?

Fintech is a broad term that encompasses any company that uses technology to provide financial services. This can include everything from mobile payments and money transfers to investment management and personal finance.

While fintech companies are often startups, they can also be divisions of larger tech companies or traditional FIs. There has been a surge in fintech companies in recent years as consumers become more comfortable trusting technology with their money.

However, while fintech offers a lot of potential for innovation and customer service, it's important to remember that these companies are still subject to the same regulations as traditional FIs. This means they need to partner with established financial institutions to provide their services.

Collaboration vs. Competition

What Is Collaboration?

In the context of business, collaboration often refers to partnering with other companies to create a new product or service.

There are many benefits of collaboration for Fintech companies. It allows companies to pool their resources and knowledge to create something greater than the sum of its parts.

What Is Competition?

In the business world, competition refers to companies fighting for market share. This can take the form of advertising wars, price wars, or simply trying to outdo each other in customer service.

While competition can be healthy for business, it can also lead to a race to the bottom in terms of prices and quality.

Understanding how these concepts apply to the world of fintech is key to understanding why collaboration is so important.

Why Collaboration Is the New Fintech Model

The old competition model between fintech companies and traditional financial institutions is no longer sustainable. For fintech companies to succeed, they need to partner with established FIs. This brings Fintech from disruption to collaboration.

There are a few reasons for this shift:


While fintech companies are often lauded for their innovation, they are still subject to the same regulations as traditional financial institutions. This means that they need to partner with an established FI to provide certain services.

For example, fintech collaboration with banks requires a partner with a licensed bank or credit union to offer banking services. This allows them to offer their customers the same services without obtaining a banking license themselves.

Access to Customers

Another reason fintech companies need to partner with traditional financial institutions is access to customers. FIs already have established relationships with their customers, which gives fintech companies a foot in the door.

Traditional FIs have local branches and ATM networks that fintech companies can leverage to reach new customers. This is especially important for fintech companies that are just starting. They are also getting involved in local business events and have established relationships with other businesses in the community.


Finally, fintech companies need to partner with traditional financial institutions because they have access to resources that startups don't. This includes everything from capital to experienced employees.

For example, when a fintech company partners with an FI, it can tap into the FI's customer base and distribution channels. This allows them to scale their business much faster than they could on their own.

Types Of Fintech Partnerships

There are a few different types of fintech partnerships:

Equity Partnerships

In an equity partnership, the fintech company and FI take equity stakes in each other. This type of partnership is often used to fund joint ventures or new products.

Debt Partnerships

In a debt partnership, the fintech company and FI provide loans to each other. This type of partnership is often used to finance joint ventures or new products.

Revenue-Sharing Partnerships

In a revenue-sharing partnership, the fintech company and FI share the revenue from joint ventures or new products. This type of partnership is often used to fund marketing initiatives or expansion plans.

Benefits Of Collaborating With Fintechs

Collaboration between fintech companies and traditional financial institutions offers several benefits:

Increased Innovation

When fintech companies partner with traditional financial institutions, they can bring their innovative products and services to a larger customer base. This increased exposure can help to drive the adoption of new technologies.

Relationship Building

Another benefit of collaborating with fintech companies is that it allows traditional financial institutions to discover how your relationships today can create opportunities for tomorrow. This can help FIs stay ahead of the curve and better serve their customers.

Improved Customer Service

Fintech companies often have customer service teams dedicated to providing an excellent experience. This can help to improve the overall customer service of the financial institution.

Increased Efficiency

Fintech companies often have cutting-edge technology that can help increase the efficiency of traditional financial institutions. This can free up employees to focus on other tasks, such as providing better customer service.

Improved Risk Management

Fintech companies often have sophisticated risk management systems in place. This can help to protect the financial institution from potential losses. Collaboration with a fintech company can help improve the financial institution's risk management.

What are Examples Of Fintech Companies?

There are many different types of fintech companies, but some of the most common include:

Payment Processing Companies

Payment processing companies provide the infrastructure that allows businesses to accept payments. Some examples of payment processing companies include Stripe, Square, and PayPal.

Lending Platforms

Lending platforms connect borrowers with lenders. Some examples of lending platforms include Prosper, LendingClub, and Funding Circle.

Investment Management Platforms

Investment management platforms provide tools and services to help investors manage their portfolios. Some examples of investment management platforms include Wealthfront, Betterment, and Personal Capital.

Financial Planning Services

Financial planning services provide advice and guidance to help people make financial decisions. Some examples of financial planning services include Mint, Wealthfront, and LearnVest.


Collaborative partnerships between fintech companies and traditional financial institutions can offer many benefits, including increased innovation, improved customer service, increased efficiency, and improved risk management. These partnerships can help both parties better serve their customers and stay ahead of the curve.


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About the Author, James Webster

James Webster, founder and Executive Chairman of ROK Financial has almost two decades of experience within the financial services industry. His passion for helping small business owners and his innovative way of thinking, has allowed him to run multiple successful businesses including National Business Capital & Services. Under the National name, the team was able to help secure over $1 Billion in financing for small businesses nationwide.