Roughly 70% of financial institutions worldwide are now investing in fintech partnerships, according to research from PwC’s Global Fintech Report. That figure has risen steadily over the past five years. In 2018, the same survey found that fewer than 45% of banks had active fintech partnerships. The shift from competition to collaboration has been one of the defining trends in financial services.
The reason is straightforward. Banks have customers, capital, and regulatory licences. Fintech companies have modern technology, faster development cycles, and better user interfaces. Combining the two produces results that neither can achieve alone.
Why Banks Started Partnering With Fintechs
For most of the 2010s, the dominant narrative in financial services was disruption. Fintech startups were going to replace banks. Neobanks would steal deposits. Peer-to-peer lenders would take over consumer lending. Payment apps would make card networks obsolete.
That narrative turned out to be mostly wrong. Banks did not disappear. They had advantages that fintech companies could not easily replicate. Regulatory licences take years to obtain. Deposit insurance is expensive and requires government approval. Large corporate clients and high-net-worth individuals prefer the stability of established institutions. According to McKinsey’s Global Banking Annual Review, traditional banks still hold more than 90% of global deposits.
What banks lacked was speed. A typical bank’s core technology infrastructure was built in the 1980s or 1990s, often running on COBOL mainframes. Updating these systems is expensive and risky. A major core banking migration can take three to five years and cost hundreds of millions of dollars. Many banks decided it was faster and cheaper to partner with fintech companies than to build modern capabilities internally.
How These Partnerships Work in Practice
Fintech-bank partnerships take several forms, and the structures have become more sophisticated over time.
The most common model is the technology vendor relationship. A bank licenses technology from a fintech company to improve a specific capability. For example, many banks use Plaid’s APIs to verify customer bank accounts and connect to external financial data. Others use Featurespace or Feedzai for real-time fraud detection powered by machine learning. The bank retains the customer relationship and the fintech provides the underlying technology.
Banking-as-a-Service (BaaS) is a more integrated model. In this arrangement, a bank provides its banking licence and regulatory infrastructure while a fintech company builds the customer-facing product. Green Dot, Cross River Bank, and Sutton Bank in the US have all served as the banking partners behind fintech products like Chime, Stripe Treasury, and Cash App. The fintech handles the user experience, marketing, and customer acquisition. The bank handles compliance, holds the deposits, and earns a share of the revenue.
Some partnerships go further into joint ventures or strategic investments. Goldman Sachs built its Marcus consumer banking platform partly through partnerships with Apple (for the Apple Card) and Amazon (for small business lending). JPMorgan Chase has made multiple fintech acquisitions, including 55ip (investment technology) and Renovite Technologies (payment processing). These are not arm’s-length vendor relationships. They are strategic bets on fintech capabilities becoming core to the bank’s operations.
What the Data Shows About Partnership Outcomes
Banks that invest in fintech partnerships report measurable improvements across several metrics.
Customer acquisition costs tend to fall. According to a 2024 survey by Accenture, banks with active fintech partnerships reduced their average customer acquisition cost by 20% to 35% compared to banks relying solely on traditional channels. Digital onboarding processes, often built by fintech partners, allow customers to open accounts in minutes rather than days.
Loan processing times improve. Traditional mortgage origination in the US takes an average of 45 days, according to the Mortgage Bankers Association. Banks using fintech platforms for automated underwriting and document processing have cut that to 15 to 20 days. AI-powered financial tools are handling an increasing share of credit decisions, reducing both processing time and default rates.
Fraud detection rates improve as well. Machine learning models built by fintech partners can process thousands of transaction signals in real time, flagging suspicious activity faster and more accurately than rules-based systems. Several major banks reported 30% to 50% reductions in fraud losses after implementing fintech-built detection systems, according to data from the Association of Certified Fraud Examiners.
The Risks and Tensions
Fintech-bank partnerships are not without problems. Regulatory scrutiny of these arrangements has increased, particularly around BaaS models. In 2023 and 2024, US banking regulators issued enforcement actions against several banks for failing to properly oversee their fintech partners. Evolve Bank & Trust and Blue Ridge Bank both faced regulatory orders related to their fintech partnership programmes.
The concern from regulators is that some banks are outsourcing too much responsibility to fintech partners without maintaining adequate oversight of compliance, anti-money laundering controls, and consumer protection. This has led to a tightening of expectations around how banks manage third-party relationships.
Data sharing is another area of tension. Banks are cautious about sharing customer data with fintech partners, partly due to regulatory requirements and partly due to competitive concerns. Open banking regulations in Europe and the UK have forced banks to share data with authorised third parties, but the implementation has been uneven. Some banks comply with the letter of the regulation while making the data-sharing process as slow and difficult as possible.
Where This Is Heading
The 70% figure is likely to keep rising. Embedded finance, which requires banks to provide financial products through non-bank platforms, depends entirely on these partnerships. As more retailers, platforms, and software companies want to offer financial services to their users, they need a bank partner to provide the regulated infrastructure.
The nature of the partnerships is also evolving. Early fintech-bank relationships were often transactional. A bank would licence a piece of technology, use it for a specific function, and that was the extent of the relationship. Newer partnerships tend to be deeper and more strategic. Banks are taking equity stakes in fintech companies, co-developing products, and integrating fintech capabilities into their core operations rather than treating them as add-ons.
For fintech companies, bank partnerships are often the fastest path to scale. Building a fully licensed, regulated financial institution from scratch takes years and costs millions. Partnering with an existing bank gives a fintech company access to the regulatory infrastructure, deposit base, and institutional credibility it would otherwise need to build on its own. The companies that manage these partnerships well, balancing innovation speed with regulatory compliance, are the ones most likely to succeed in the next decade of financial services.
