Cooperation models with FinTechs in the German banking industry

Abstract

Innovative technological developments as well as new business practices lead to a digital transformation of financial services. The developments in technology are especially accelerated by nonbanking technology providers. In fact, traditional financial service providers are facing increasing pressure from new competitors, like FinTechs. Banks perceive the disruptive and low-cost solutions of these start-ups as a direct attack on their value chains or their previous business models and fear a loss of market share. But an increasing number of banks displays a change of thinking: Instead of fearing and competing with FinTechs, they integrate them in their strategical considerations. More and more banks decide to cooperate with FinTechs. Access to new technology and keeping up with the customer demands are considered as the most remarkable opportunities of a possible cooperation. The present work analyzes and presents possible cooperation models on the basis of expert interviews with FinTechs, BearingPoint consultants and employees of German banks. The variety of approaches and possibilities of cooperation are formulated for example with the help of the case of LBBW, a universal as well as commercial bank of southern Germany.