CFI Outlines the Benefits of Banks Partnering with Startups
September 21, 2016
As part of a series presented by the Center for Financial Inclusion (CFI) about the financial sector, Vitas Argimon explains the unique value presented by partnerships between financial startups and banks. Instead of every player duplicating the work of the others by forging ahead alone, partnering is the best way to strengthen the sector together.
In an article titled Commercial Banks Are Partnering With Fintechs to Reach the Unbanked, Argimon elaborates:
“As challenges by tech-enabled competition mount, banks are seeking to link-up with startups as they see opportunities to reach new markets, bring down costs, and/or enhance their service offerings. Startups offer agility, a proclivity for risk-taking, and a disruptive mindset. On the other hand, banks already have the customer scale, comprehensive product portfolio, robust infrastructure, deposit insurance, branding, and experience/expertise. The combination of these strengths can be especially enabling when seeking out previously unreached population segments because the business models for serving those segments often depend on technologies that bring down costs. Startups can offer banks the tools they need to serve lower-income customers that would be difficult to serve within the confines of their traditional banking models. At the same time, many startups need access to customers and financial resources that banks can provide.” (emphasis added)
Argimon further highlights the benefits of bank-fintech partnerships in another article called “The New Wave of Partnership Models Between Banks and Startups.” He states that “many banks are building a vast ecosystem of partnerships to expand their reach and service offerings and to improve internal processes.” Juntos’ partnership with BBVA is highlighted in a graphic within the article.
The characteristics inherent to both banks and startups provide a unique opportunity for partnerships and growth between both entities. For further reading, be sure to read both the first and second article in the CFI series.