By RARZACK OLAEGBE
Fintech-bank partnerships are invaluable to the ecosystem
You cannot succeed alone. Picture a reality show: a man versus the machine. The man must solve a puzzle alone. The machine (robot) must solve the same puzzle. The man struggled for days. The machine struggled. But when the man and machine united, the puzzle was solved. This is the theme of the analogy. No egg, no omelette. Even then, you need a chicken in the mix. Therefore, no chicken, no egg, no omelette.
On the one hand
Fintechweekly shared a story about the time when fintechs spoke about banks the way start-ups speak about dinosaurs. They would say the banks are ‘’too slow’’, ‘’too tied to outdated systems’’. Therefore, the fintechs decided to make a pitch. The pitch was simple: build something faster, smarter, and more accessible. Leave the incumbents behind.
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According to Fintechweekly, Klarna has secured a major funding arrangement with Santander, a bank that directly competes with Klarna in Germany. Then the story shifts. Suddenly, the new world of finance does not look like a battle to the death. It looks like cooperation was born out of necessity.
On the other hand
Well, this is not a reality show. It is the reality. Credit is expensive. Regulation is heavy. Growth requires capital. For Klarna, taking on a €1.4 billion facility from a rival makes sense. For Santander, lending to a fintech competitor gives it exposure to the model that is threatening to undercut traditional lending. Each gets something the other cannot build alone.
In the long term
That is the story. Fintech’s future is not about pure disruption. It is an entanglement. A collaboration. Challenger banks run on cloud infrastructure built by incumbents. Payment companies rely on global card networks. Buy Now Pay Later leaders need bank facilities. The line between fintech firms and banks is not about who wins. It is about how they can stay relevant by leaning on each other.
If anything, this should make us rethink the narrative. Fintech cannot replace banks. Fintech is part of an ecosystem that the banks cannot fully control anymore. Fintechweekly mentioned that Klarna’s latest deal shows that even the loudest disruptors know when it is time to call the bank. Yes, some fintech firms have called the bank.
All fintech firms in Nigeria are working with banks. The list is endless. Why are fintech firms collaborating with banks? It gives fintech firms access to new markets. Enhances digital offerings. Improves customer experience. Provides the backend infrastructure. Offers compliance support. According to a study by PwC, 42% of surveyed banks were actively engaged in partnerships with fintechs. About 94% of banks have shown faith in fintech partnerships for revenue growth.
Besides, banks help fintech firms to grow. Banks provide fintech firms the backend needed to thrive. Think of it as a partnership where both parties benefit. These collaborations have paved the way for more partnerships called Banking as a Service (BaaS). Ekaterina Podgaiskaya, a fintech expert, wrote that BaaS would generate $300 to $500 billion globally in 2030 while Europe alone might see earnings from $60 to $80 billion in 2025.
In the short term
If you do not have a partnership with a bank, remember the egg and omelette.
*Olaegbe ([email protected])
