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Fintech partnerships are reshaping financial services by combining banks' trust and compliance expertise with fintechs' agility and technology. This collaboration drives innovation, expands customer reach, and opens new markets. But nearly two-thirds of partnerships fail due to misaligned goals or poor execution. Here's how to succeed:
Building successful fintech partnerships requires a structured approach that balances creativity with regulatory demands. Three key frameworks have become the backbone for scalable and profitable collaborations: Banking-as-a-Service (BaaS) models, embedded finance collaborations, and white-label or co-branded solutions. Each plays a distinct role in shaping strategic goals. Let’s dive into how these frameworks drive fintech partnerships.
Banking-as-a-Service is reshaping how financial services are delivered, allowing non-banks to offer banking products by partnering with licensed institutions. This setup enables fintech companies to focus on creating innovative customer experiences while banks handle compliance and infrastructure.
The numbers tell a compelling story: the global BaaS market hit nearly $16 billion in 2023 and is expected to grow at over 17% annually through 2032. Banks have already seen an 18% increase in deposits between Q1 2022 and Q1 2023. On top of that, BaaS technology can slash customer acquisition costs, typically $100–$200, down to just $5–$35.
A BaaS partnership usually includes these four essential components: banking infrastructure, payment systems, lending and deposit products, and account management. As Charles Richards, Senior Manager at PwC UK, puts it:
"BaaS allows for new types of financial institutions, focused on innovative customer service and digital experiences".
A great example is Affirm Holdings Inc., which collaborates with Evolve Bank & Trust for its Affirm Card and works with Cross River Bank and Celtic Bank Corp. for financing. By leveraging multiple banking partners, Affirm can offer a wide range of financial services without having to build its own banking infrastructure.
Smaller fintechs often team up with BaaS platform vendors, while larger, more established players partner directly with banks that have mature operational frameworks. This approach helps fintechs navigate regulatory challenges while driving digital transformation.
Embedded finance integrates financial services directly into non-financial platforms, making transactions seamless for customers. This model typically involves three key players: sponsor banks (handling compliance), BaaS providers (offering tech platforms), and the end-brands (delivering services to users).
The potential here is enormous. In the U.S., embedded finance transactions are forecasted to grow from $2.6 trillion in 2021 to $7 trillion by 2026, with the global market projected to hit $7.2 trillion by 2030. Notably, 63% of U.S. consumers under 35 are open to using financial services from non-banks. According to McKinsey, embedded finance can boost conversion rates from 15% to 50% or higher by simplifying the customer journey.
Examples of embedded finance in action include Shopify Balance, which helps store owners get paid faster without needing a separate bank account, and Freshbooks’ partnership with YouLend, offering revenue-based funding with same-day approvals for some businesses. Similarly, Uber’s collaboration with GoBank allows drivers to access their earnings instantly within the Uber app, eliminating traditional payment delays.
"Customers want a seamless, Netflix-like experience in every facet of their lives, and that absolutely relates to banking right now. They're demanding personalization and intimacy. They don't want to tell you more than once who they are or what services they require. And they want speed."
Success in embedded finance depends on selecting partners with strong compliance records and ensuring that technology systems are compatible and scalable. This framework not only meets customer expectations but also keeps regulatory requirements in check.
White-label and co-branded solutions let companies tap into partner expertise while maintaining their own brand identity. The choice between these models depends on a company’s goals and market strategy.
| Aspect | White-Label Solutions | Co-Branded Solutions |
|---|---|---|
| Branding | End product carries only the selling company’s name | Both brands are prominently featured |
| Control | Full control over marketing, pricing, and distribution | Shared decision-making between partners |
| Customer View | Customers see only one brand | Customers recognize both companies’ involvement |
| Revenue Model | Fixed fee or percentage to the provider | Shared revenue based on agreement terms |
| Risk Distribution | Primary risk lies with the selling company | Risks and rewards are shared |
White-label solutions are ideal for companies seeking full control over their branding. For instance, a fintech might develop a digital wallet that banks can rebrand as their own, allowing for quick market entry without heavy development costs.
On the other hand, co-branded partnerships bring together the strengths of both parties. A prime example is the Goldman Sachs and Apple partnership behind the Apple Card, which combines Goldman Sachs’ financial expertise with Apple’s design and customer reach.
Sergio Rabiela, Vice President of Software Engineering at OneMain Financial, highlights the growing appeal of white-label solutions:
"The increase in white-label fintech infrastructure is interesting because it increases the number of companies that can enter the space by licensing off-the-shelf loan management systems, decision engines, verification platforms and more".
White-label solutions offer quicker market entry and full brand control but require robust internal teams for customer support and compliance. Co-branded models, while sharing risks and rewards, demand aligned visions and compatible organizational cultures. Together, these frameworks set the stage for aligning partnership goals, a critical step in fintech collaboration.
Once a framework is chosen, the next step is to align goals and strategies to build long-term value. This involves focusing on three key areas: crafting a joint value proposition that benefits all parties, conducting a thorough market opportunity analysis, and ensuring compatibility in processes and culture.
A powerful joint value proposition isn’t just a blend of offerings - it addresses a real business challenge and delivers value that neither partner could achieve on their own. The secret lies in clearly communicating the unique advantages each partner brings to the table.
Keep it simple. Elliott Haralambous, Director of Global Ecosystems at Backbase, stresses the importance of clarity:
"If you need 20 minutes to explain to your customers, what is the value that your organisation and your other partners bring - it's likely that the partnership is not solving an impactful enough problem."
The most effective value propositions include five core elements: shared benefits that tackle customer pain points, complementary offerings that leverage each partner’s strengths, unique differentiators that set the partnership apart, proven use cases, and clear messaging that sales teams can easily understand and communicate.
Ben Snowman, VP Partnerships & Advisory at Mambu, sums it up well:
"Solving the target architecture is great, but at the highest order it must be clear - what is the one plus one equals three?"
Start small and test extensively. Begin with a simple use case backed by a real customer example. Test it in pilot markets to refine the partnership and address challenges before scaling. Snowman advises:
"The best thing to do is to start in two markets - you pipe clean the joint sales motion and can A/B test, then apply learnings and get ready for scale, confidently."
Executive sponsorship is critical. Haralambous underscores this point:
"You need executive alignment from the start because you have to start with the vision - partnerships like this need to be sponsored by a CxO - but also have real advocates championing the partnership, otherwise you risk becoming nothing more than a strategy on a page."
With a strong value proposition in place, the next step is to analyze market trends and identify partnership opportunities.
Understanding market needs and gaps is essential to finding the right opportunities and ensuring the partnership meets real customer demands. This analysis should cover customer preferences, technological advancements, the competitive landscape, and regulatory requirements.
Know your customers thoroughly. Fintech firms must have a deep understanding of their customers to identify the best technologies and delivery channels. The demand for fintech partnerships is clear - 94% of financial services companies believe fintechs will help grow their revenue in the coming years. This optimism highlights the potential for meaningful collaborations.
Stay on top of technology trends. To partner effectively with financial services organizations, fintechs need to stay informed about cutting-edge technological developments.
Regulatory changes and compliance are also critical considerations. Michael J. Hsu, Acting Comptroller of the Currency, explains:
"Modernizing the bank regulatory perimeter cannot be accomplished by simply defining the activities that constitute 'doing banking,' but will also likely require determining what is acceptable in a bank-fintech relationship."
Evaluate financial stability carefully. Hank Word, President of Open Banking at Evolve Bank & Trust, stresses the importance of assessing financial realities:
"With the uncertain macroeconomic environment, recognizing funding requirements and realities is crucial in establishing successful partnerships. The bank needs to understand the financial viability of the fintech in order to best assess the potential partnership. And sometimes that means revisiting the opportunity in a few months."
Once market opportunities are validated, the focus shifts to ensuring alignment in processes and culture.
Cultural alignment can make or break a partnership. In fact, 30% of partnership failures are linked to cultural mismatches.
Anticipate cultural differences. Fintechs and traditional financial institutions often operate at different speeds and with different priorities. While fintechs emphasize rapid innovation and market disruption, traditional banks focus on regulatory compliance and risk management. These differences can create friction if not addressed.
Alex Reddish, Managing Director at Tribe Payments, highlights the need for shared commitment:
"A good partnership takes more than just openness and a good relationship... It takes a culture that is dedicated to mutual success."
Establish clear communication. Both sides should respect each other’s cultural backgrounds and communication styles. Hank Word emphasizes transparency:
"Time is always of the essence in financial services. Transparency on time to market is key on both sides. It's important to understand the fintech's wants and needs while remaining realistic with internal capabilities."
Define roles and responsibilities. Clarity is essential for accountability. Word recommends using tools like a Scope of Work document to assign responsibilities:
"In any partner relationship, it is important to have clearly defined responsibilities. We found that a Scope of Work document with each line item assigned to a responsible party is a great way to hold ourselves and our partners accountable."
Prepare for the management effort. Fintechs should plan for the significant effort required to meet customer needs, control costs, and integrate technologies effectively.
To evaluate cultural compatibility, firms can conduct stakeholder interviews, analyze employee feedback on platforms like Glassdoor, and implement cross-cultural training programs. Tools like the Culture Design Canvas are also helpful for mapping and comparing organizational cultures.
When cultural alignment is achieved, it builds trust, streamlines processes, and strengthens the partnership - while cultural clashes can undermine even the best business plans.
Effective technology integration and adherence to compliance standards form the backbone of successful fintech partnerships. Without strong API frameworks, rigorous security measures, and built-in compliance, even the most promising collaborations risk failure. The stakes are high - over 86% of fintechs have faced hefty fines in recent years, and the average cost of a data breach reached $4.88 million in 2024.
APIs act as the essential bridges between fintech platforms, enabling smooth integration of banking and financial services into various applications. With 88% of organizations prioritizing APIs for their business and IT operations, establishing a strong technical foundation is non-negotiable.
Choose the right API framework: RESTful APIs offer scalability, GraphQL allows for flexible queries, and SOAP is ideal for high-security transactions.
Take DBS Bank in Singapore, for example. By implementing over 400 APIs across its ecosystem in 2022, the bank automated 90% of its loan processing operations, cutting average processing times from seven days to under 24 hours and reducing error rates by 75%. Similarly, Bank of America’s API-first approach led to a 28% boost in digital engagement and a 12% improvement in customer retention within 18 months.
Secure APIs effectively: Use gateways to manage traffic, enforce policies, and detect threats. Standards like OAuth 2.0 and OpenID Connect handle authentication and authorization, while TLS 1.3 ensures encrypted data transmission. Field-level encryption can further protect sensitive data when stored.
In 2022, JP Morgan Chase implemented an API-based security system, slashing fraud detection times from hours to minutes and cutting fraud-related losses by 60%.
Maintain data integrity: Use OpenAPI 3.1 to validate schemas and enforce data minimization, ensuring only necessary data is shared. Adopting an allowlist approach - explicitly defining which data fields can be exposed - reduces the risk of vulnerabilities.
Imran Gulamhuseinwala, Trustee of the UK's Open Banking Implementation Entity, highlights the importance of APIs:
"APIs allow financial institutions to plug into ecosystems where value creation happens faster and at scale."
The financial benefits are clear. Proper API implementation can lead to a 28% increase in monthly card spending and a 7% rise in transaction frequency. With the global banking API market projected to hit $43.15 billion by 2026, growing at a rate of 19.4% annually, investing in robust API frameworks is a smart move.
Compliance is essential for building trust and ensuring long-term success. With 79% of financial institutions and 77% of investment firms citing cyberattacks as a top concern, strong compliance measures are more important than ever.
Integrate compliance from the start. Fintech firms should embed regulatory requirements into every stage of development to avoid costly last-minute fixes. A compliance-first mindset ensures smoother operations and fewer surprises down the line.
Automate compliance processes. Tools powered by AI and machine learning can streamline critical areas like fraud detection, risk management, and regulatory reporting. Ivan Pilnikau, Blockchain Development Expert at Vention, explains:
"KYC and AML have become critical for financial services organizations and electronic money movement in general. Now, with AI and ML, these processes take seconds instead of days."
Mitigate third-party risks. Conduct thorough due diligence, establish clear contractual safeguards, and perform regular audits to ensure partners meet compliance standards. With 83% of web traffic flowing through APIs, monitoring these touchpoints is crucial.
A strong compliance toolkit should include:
| Tool | Purpose |
|---|---|
| SAST | Scans source code during development to ensure secure coding practices |
| DAST | Tests production systems for vulnerabilities and logic flaws |
| SCA | Ensures third-party libraries meet regulatory requirements |
| API Security | Identifies and secures exposed API endpoints |
| Multi-Factor Authentication & Role-Based Access Control | Prevents unauthorized access and protects sensitive data |
| Data Encryption | Safeguards data by making it unreadable without proper authorization |
Monitor compliance continuously. Regular audits, real-time regulatory intelligence, and automated pentesting platforms are vital. Testing for business logic vulnerabilities ensures that systems remain secure and compliant.
The European Union’s GDPR underscores the importance of compliance, with fines reaching up to €20 million or 4% of global annual turnover for violations. Additionally, ransomware payouts exceeded $1 billion in 2023, illustrating how non-compliance can lead to significant financial losses.
Real-time monitoring enhances transparency and security, which are critical for maintaining strong fintech partnerships. With embedded finance partnerships contributing 51% of sponsor banks' revenue and deposits on average, effective monitoring can be a game-changer.
Use real-time dashboards. Track key metrics like payment approval rates, vendor behavior, API performance, deposit processes, and settlement times. Granular data views - organized by location, payment method, or device - offer actionable insights for improvement.
In September 2024, Acceldata highlighted the importance of frequent transaction monitoring. A payment processor that reviewed transactions every few seconds was able to flag unusual patterns and block fraudulent activity in real time, avoiding losses and preserving customer trust.
Adopt AI-driven monitoring tools. These systems recognize normal data patterns and flag anomalies automatically. By prioritizing alerts based on financial impact, businesses can focus on what truly matters instead of drowning in irrelevant notifications.
Jem Walters, Co-founder and CTO at Snoop, emphasizes the role of real-time monitoring:
"When you're running a modern app-based start-up, real-time is the lifeblood of the business. Every day we are thinking about scale and do we have the right tools in place to speed the delivery of features and mature our model. We are all in on observability and Sumo Logic is providing the real-time insights and intelligence across our business to operate like a bank and protect our customer data."
Maintain structured communication and audit trails. Centralized platforms improve collaboration and ensure comprehensive audit records. Tools like Request for Information (RFI) systems streamline communication and enhance transparency.
In August 2024, Alloy introduced an Audit Access module, giving sponsor banks and electronic money institutions easy access to their fintech partners’ compliance policies and risk controls. Teddy Gordon, Director of Data at Grasshopper Bank, noted that this feature simplifies audit preparation and improves reporting efficiency.
Automate compliance monitoring. Automated systems for Know Your Customer (KYC) and Anti-Money Laundering (AML) checks can help organizations stay ahead of regulatory requirements. Continuous entity monitoring and program management ensure that compliance standards are consistently met.
A digital bank that processes daily transactions at regular intervals can generate accurate compliance reports, avoiding penalties that could run into millions. Scheduled data handling minimizes risks while keeping operations aligned with regulatory expectations.
Richard Scioli, General Manager of Global Fintech at Alloy, sums it up:
"From a regulatory perspective, banks are required by default to have access to their fintechs' data."
Real-time monitoring transforms compliance from a regulatory burden into a strategic advantage, enabling faster decision-making, better risk management, and stronger partnerships. This continuous oversight not only protects operations but also helps refine business strategies for long-term success.
In fintech partnerships, success isn’t just about getting started - it's about consistently evaluating, improving, and fine-tuning the collaboration. Defining clear metrics and regularly making adjustments can mean the difference between thriving partnerships and costly setbacks.
Tracking the right metrics is where effective measurement begins. According to Gartner, by 2026, 65% of B2B sales organizations are expected to shift from intuition-based decisions to data-driven strategies. For fintech partnerships, this makes selecting strategic KPIs essential.
Revenue metrics such as partner program revenue, per-partner revenue, revenue growth, and ROI provide a clear picture of financial impact. Meanwhile, engagement metrics like satisfaction scores, training completion rates, portal usage, and lead response times help assess how well the partnership operates day to day.
Take AvePoint as an example. When they began working with Impartner, only 20% of their revenue came through channel partnerships. By focusing on key performance metrics, they increased that figure to 50% within two years. Sam Valme, Senior Director of Channel Experience at AvePoint, shared:
"When we first started with Impartner, we were at 20% channel revenue. After two years, we're at 50% of our revenue touching the channel."
Partner engagement metrics are especially critical in fintech, where quick responses can make or break customer acquisition efforts. For instance, Palo Alto Networks achieved a 40% quarter-over-quarter increase in partner engagement by emphasizing these metrics. Stephanie Zembal, Senior Manager of Channel Marketing, noted:
"It's really been essential in changing the way that our partners are able to co-market with us. We're seeing about a 40% quarter over quarter growth when I'm measuring partner engagement, which is fantastic."
Market expansion and customer impact are other vital areas to monitor. Metrics like new markets entered, market share gained, co-developed products, and customer retention rates reveal how partnerships contribute to growth and customer satisfaction.
| Category | Key Metrics | Purpose |
|---|---|---|
| Revenue-Related | Partner Program Revenue, Per-Partner Revenue, Revenue Growth, Partnership ROI | Tracks financial performance and ROI |
| Partner Engagement | Partner Satisfaction Scores, Training Completion Rates, Portal Usage, Lead Response Time | Evaluates operational efficiency and partner experience |
| Market Expansion | New Markets Entered, Market Share Gained, Co-Developed Products, Customer Retention | Assesses growth opportunities and customer impact |
Metrics should align directly with business objectives, whether it’s expanding into new markets, improving efficiency, or driving customer acquisition. By tying KPIs to these goals, fintech companies can remain agile and competitive.
Feedback loops are essential for turning a good partnership into a great one. By collecting and acting on insights from partners and stakeholders, businesses can refine their collaborations effectively.
To gather well-rounded feedback, use multiple channels such as surveys, one-on-one meetings, focus groups, and anonymous forms. Creating an open and safe space for honest communication is crucial - partners need to feel comfortable sharing concerns without fear of repercussions.
Datawisp, a no-code data analysis platform, offers a great example. After receiving negative feedback about their interface, they conducted a UX audit, simplified user flows, and redesigned the platform. This feedback-driven approach not only improved the product but also helped them secure $3.6 million in seed funding.
Regularly scheduled check-ins - quarterly or biannual - combined with automated tools like CRM systems and analytics platforms ensure timely feedback collection. However, the feedback must be actionable. For example, Populate, a healthcare startup, incorporated user testing during app development to address physician burnout. Based on feedback, they added features like dropdown lists and speech-to-text functionality, significantly improving usability.
Incorporating diverse perspectives from various stakeholders ensures a balanced view of challenges and opportunities. Regular feedback cycles don’t just enhance current performance - they also provide insights for future strategic decisions.
Even successful partnerships may need to end, and having a well-thought-out exit strategy is essential. Economic shifts have led 23% of businesses to fast-track their exit plans, underscoring the importance of preparation.
Start by drafting a detailed partnership agreement from the outset. Include key provisions such as buy-sell clauses, indemnification terms, and clear steps for dissolving the partnership. This documentation ensures clarity if an exit becomes necessary.
Defining roles and succession plans early prevents confusion during transitions. Addressing potential challenges like valuation disputes or unexpected events ahead of time can avoid costly legal battles. Regularly updating partnership agreements ensures they stay relevant as business needs evolve.
Financial readiness is another critical factor. Maintaining a reserve fund and avoiding over-reliance on credit provides flexibility during exit negotiations and helps safeguard ongoing operations.
Professional guidance can streamline the process. Business partnership consultants can help manage transitions efficiently, reducing emotional bias and preserving relationships.
A well-prepared exit strategy not only minimizes disruptions but also protects the value of the business, ensuring smooth operations even after the partnership ends. Proper planning allows for a seamless transition, maximizing outcomes for all parties involved.
Successful fintech partnerships thrive by creating ecosystems that promote innovation and growth over the long haul. These partnerships are built on frameworks that can weather shifts in the market, regulatory landscapes, and customer needs.
The data highlights a critical point: a unified and strategic approach is essential. Misaligned goals and poorly executed strategies often lead to failure, with nearly two-thirds of partnerships falling short. On the other hand, banks that adopt comprehensive growth strategies are 97% more likely to achieve above-peer profitability.
The secret to success lies in viewing partnerships as genuine collaborations rather than mere supplier arrangements. As Phil Goldfeder, Chief Executive Officer of AFC, explains:
"As one of the only organizations that represents both innovative banks and fintech companies, we know that responsible bank-fintech partnerships have dramatically expanded access to credit and banking services in historically underserved communities and are crucial to the continued viability of community banks nationwide."
Regulatory compliance also plays a pivotal role. A staggering 90% of sponsor banks report challenges in this area. Having solid frameworks for regulatory oversight and risk management is non-negotiable. The partnership between Goldman Sachs and Apple Card serves as a cautionary tale - misaligned risk-sharing led to approximately $500 million in pre-tax losses between Q4 2022 and Q3 2023.
Looking ahead, the fintech industry shows no signs of slowing down. Revenues in fintech are projected to grow nearly three times faster than those of traditional banks from 2022 to 2028. Meanwhile, investments in AI for banking and financial services are expected to climb by $31 billion globally by 2025. These figures highlight the urgency of building partnerships that can adapt to rapid technological advancements and shifting market dynamics.
For fintech firms and financial institutions aiming to establish lasting collaborations, the strategies outlined in this guide offer a clear path forward. Whether through Banking-as-a-Service models, embedded finance initiatives, or aligning goals and performance metrics, each piece plays a crucial role in creating partnerships that deliver measurable results.
The future belongs to organizations that strike the right balance between innovation, compliance, and growth. By aligning on shared value propositions, integrating technology effectively, and adhering to robust compliance frameworks, partners can set the stage for enduring success. With structured frameworks and a commitment to continuous improvement, fintech partnerships can lead the charge in shaping the next era of financial services.
For those ready to accelerate their partnership strategies and market execution, consulting services like Visora can provide the expertise needed to succeed.
Banking-as-a-Service (BaaS), embedded finance, and white-label solutions are three important ideas shaping fintech collaborations, each catering to different needs.
BaaS lets banks open up their infrastructure and services through APIs. This means businesses can create and brand their own financial products while relying on the bank’s backend for things like compliance and operational support.
Embedded finance takes a different approach by weaving financial services directly into non-financial platforms. Think about apps for e-commerce or ride-sharing that offer payment or lending options right within the platform. The goal here is to improve customer experiences by providing financial tools exactly when and where they’re needed.
White-label solutions are pre-designed financial products that companies can rebrand and present as their own. Unlike BaaS, which involves backend integration, these solutions are ready to go, allowing businesses to launch quickly without needing to build anything from scratch.
To establish a solid working relationship with traditional banks, fintech companies need to prioritize open communication and gain a clear grasp of the bank’s main priorities, like regulatory compliance and risk management. When fintechs align their cutting-edge solutions with these critical values, it builds trust and lays the groundwork for collaboration.
Another key step is creating a shared vision and setting clear goals from the start. Bringing key stakeholders from both sides into the planning process fosters mutual commitment and helps address any cultural gaps. This kind of proactive effort not only strengthens the partnership but also reduces the chances of misunderstandings down the line.
To build strong relationships with banks, fintech companies need to focus on two key areas: compliance and technology.
Compliance is a must-have. Fintechs need to follow strict regulations, such as Anti-Money Laundering (AML) laws and consumer protection rules. This means staying compliant isn't just a one-time effort - it requires ongoing processes like regular audits, thorough risk assessments, and proactive monitoring to keep up with any regulatory updates.
On the technology front, fintechs should prioritize systems that ensure data privacy, security, and operational transparency. Using advanced tools for safeguarding data and enabling secure integrations can go a long way in earning the trust of banking partners. When fintechs combine strong compliance practices with cutting-edge technology, they set the stage for long-lasting and successful partnerships with banks.
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