Many of fintech’s success stories are built upon businesses that would have traditionally been competitors coming together as collaborators to fix a specific problem, which has benefitted the industry and consumers alike. In today’s fast-paced environment, a ‘do-it-alone’ strategy does not always cut it.

Historically a key trend that has underpinned the growth of the industry has been traditional organizations such as big banks and government agencies partnering with tech-driven newcomers. Encouraging regulations and policy changes like Open Banking have helped the sector harness an ever-expanding range of technological possibilities.

Collaboration has not just been limited to fintech partnering with large incumbents, however. Growing numbers of fintech are partnering with one another to drive innovation and provide customers with an ecosystem of partners that know how to work and integrate together, while most importantly, meeting customers’ needs. This trend should be encouraged as it delivers multiple benefits including allowing businesses to harness smart thinking from across the fintech industry while avoiding the clashes of perspective and culture they might encounter with more traditional organizations. This isn’t just limited to the financial services sector either, with companies such as food delivery applications or mobility solutions partnering with fintech via embedded finance solutions to offer their customers a winning product.

Two, three, or perhaps no heads at all?

Fintechs who want to partner with players from the same industry need to make sure the partnership is aligned with their needs. While the rewards of partnerships are high, strategic collaboration requires thoughtful consideration. Depending on the product, the size of the business, or the expected outcome of their venture, there are three principal options that they should consider.

They can decide to not partner at all and build the entire product or proposition themselves. While you’ll be able to design exactly what you want, this can take a long time and a lot of money to develop and implement. Then there’s the ongoing resource required to maintain, develop and remain compliant.

Fintechs can also decide to outsource some of their needs to a single partner. This is something scaling fintech often does to plug gaps in existing capabilities, improve user experience, and increase their go-to-market time by relying on one, often more-established generalist with a ‘broad brush’ approach.

Alternatively, fintech could partner with multiple, best-in-class specialists, leveraging their varied skills to fuel growth. For example, a company could partner with one provider for cross-border payment solutions, another for card issuing, and a separate one for compliance.

From competition to collaboration

Whichever approach fintech decides to pursue, in our experience there are benefits to bringing together different expertise, technology, and purpose. Here collaboration trumps competition, and as opposed to the wider world of commerce where businesses often fall victim to fierce competition, fintech is achieving success by working towards common goals.

Further, many of the most successful fintech are fast-moving, agile, and able to rapidly respond to change and the ecosystem’s disruptive characteristics. This flexible approach means many are pragmatic and access the pool’s diverse capabilities to meet a specific challenge when it arises.

Fintechs are also often distinct from traditional financial institutions in that their culture is inherently different. They can choose best practices and styles to create something new and compelling, which gives them an ‘open-mindedness’ towards partners and an appreciation that diverse perspectives yield positive results. Problems are easier to solve when they are looked at from multiple angles.

A good example of an effective fintech partnership is the recent collaboration between global payments platform Currencycloud, Transact Payments Limited (TPL) – principal Scheme member for Visa & Mastercard and BIN sponsor, and financial infrastructure platform Integrated Finance (IF) to deliver a unique solution for sync., the all-in-one money aggregation app. In this case sync. had a vision of creating a super app that would allow users to instantly access, manage, and view all their accounts across different banks within a single app.

Integrated Finance provided sync. with the ability to open customer accounts and move funds between multiple banks and institutions by automating its workflows and enabling sync. to connect easily to other institutions. Transact Payments Limited enabled them to issue their card via a new settlement system which allowed them to hold multiple currencies and offer them to customers. Currencycloud, meanwhile, allowed sync. to offer their customers different currencies within the app and the ability to access a global market and remain compliant. This collective know-how provided the framework for sync. to build a truly unique application and get to market in less than three months.

Alliances like these are synonymous with innovation and improved offerings for customers. For fintech, the right choice might not always be to align themselves with legacy banks and consultancies first but to instead look to their counterparts. In an industry that offers novel solutions to customers, a partnership model can generate the energy that fuels growth, innovation, and creativity.