Strategic Alliances between Banks and Fintechs for Digital Innovation: Motives to Collaborate and Types of Interaction

Abstract

In times of digitalization, firms increasingly need to form alliances due to the higher complexity and greater dynamics of markets. Digital innovation poses challenges for established institutions (e.g., banks) in adapting to changing rules that are set by new competitors and higher customer expectations. However, young firms providing technical solutions for the financial services industry (fintechs) also face difficulties, such as meeting regulatory requirements. Due to the shortcomings of both banks and fintechs, firms in the financial services industry are increasingly forming alliances. We conducted interviews to examine the motivations of both banks and fintechs to join forces. The resulting motives are categorized as matching, complementary, and neutral. The alliances in our sample can be differentiated into financial investments and customer-service provider relationships, with the second category being most common. However, our findings reveal that the occurrence of particular motives is not linked to certain types of alliances. Building on these findings, we develop a motivation framework and derive practical implications.