How collaboration benefits both FinTechs and financial institutions

The FinTech Pledge has helped support stronger FinTech and financial services relationships that will ultimately benefit consumers.

In brief

• The Fintech Pledge has meant a smoother start to partnerships for both FinTechs and financial institutions.
• New research finds core elements to partnership success include clarity on timelines and success criteria.
• The report has a key role to play in helping facilitate future partnerships, alongside better education and signposting.

Over the last 18 months, many people across the FinTech sector have had the opportunity to reflect. From our conversations across the FinTech sector we understand there to be great pride and acknowledgement with the sector’s success, in both driving growth and raising the UK’s reputation as a global FinTech centre, but there has also been consideration around the best way the industry can evolve to maintain its strong position. For example, the Kalifa Review of UK FinTech, commissioned by the Chancellor of the Exchequer for the 2020 Budget, set out some key recommendations to support the sector in skills, talent, regulation and national connectivity.

Collaboration and partnership

Another area vital to future growth is collaboration and partnership between FinTechs and financial institutions. This is why Tech Nation launched the UK Fintech Pledge (Pledge) in September 2020. The Pledge is a principles-based commitment, designed to provide clear guidance on the procurement process, clarity on progress and a named contact to guide FinTechs through the journey.

Tech Nation and EY have spoken to both FinTechs and Pledge signatories to measure the impact and draw insights to improve future partnerships. Our Building better together report found that signatories have seen numerous benefits. Many reported lower friction during onboarding, with improved transparency and clarity for FinTechs.

Institutions also said that the Pledge helped drive positive internal cultural change and cross-working to support FinTech partnerships.

Our research also confirmed the importance of partnerships to financial institutions. 

Eighty-two percent of Pledge signatories surveyed said that they expect to increase the number of FinTech partnerships in the next five years. With that in mind, we also focussed on the key characteristics that were central to successful and effective partnerships, including:

• Up-front transparency: Setting a road map with expected timelines
• Knowing who is who: Including a single, named point of contact
• Defining success criteria: Enabling each party to know what success looks like
• Timeline expectations: Having a plan with deadlines to keep the project on track
• Feedback: Ensuring both sides provide clarity on what could be improved for future partnerships

Facilitating partnerships

As part of the research we also heard from financial institutions and FinTechs around how the UK FinTech industry could go even further to help facilitate partnerships. A number of FinTechs felt that standard documentation, such as nondisclosure agreements (NDAs), would be likely to save time and money. Another common theme that resulted from our research, was the importance of ongoing education, setting expectations and clearer process labelling to ensure that the end-to-end collaboration process progressed as smoothly as possible. Alongside this, the idea of matchmaking was suggested in order to connect financial institutions and FinTechs. There was also agreement that the Pledge had a key future role, with the objective of increasing visibility and the number of signatories in the UK and abroad.

In addition, partnerships are an essential method of driving innovation across financial services firms. They also allow FinTechs to scale-up and deliver growth through the volume of customers that institutions can provide.

Our findings conclude that the Pledge has made a real impact in making the initial process more transparent and easier. For FinTechs, it has meant that they understand better what is needed to progress to a commercial contract and have more support on that journey. By joining the Fintech Pledge, financial institutions are sending a strong public message to the wider FinTech sector about their commitment to the creation of partnerships, which would facilitate increased efficiency, transparency and innovation for all stakeholders.

We expect both the Pledge and partnerships between FinTech and financial services firms to increase in importance, as UK FinTech develops. Ultimately, this will benefit consumers with more innovative products and services, and the UK economy as the sector grows in strength.