Fintechs, banks unite for win-win

Changing markets are forcing them to forge mutually beneficial alliances.

More banks are partnering with financial technology (fintech) companies to access agile tech development, plug-and-play digital solutions, and automated compliance tools to make banking better for their clients at a fraction of the cost.

Banks today are more eager to partner with fintechs, once viewed as a disruptive force in traditional banking, because of the value they offer, Samarth Bansal, general manager at Wise Platform, told Asian Banking & Finance.

“There’s a lot of appetite, a lot of willingness and a lot of recognition that this is the way in which transactions are headed towards,” he said via Zoom. “For our part, banks recognize that for something as simple as making cross-border payments instant, they need a partner.”

Four of five of the top 100 banks by assets have partnered with at least one fintech company, according to McKinsey & Co., and fintech tie-ups can be the most effective way banks can digitize.

Bansal, who heads the business-to-business arm of Wise, which provides money transfer solutions, said many banks are still focused on keeping their customers within their apps because they think that’s how they can make more money.

“Banks will say, ‘I need customers to hold as much deposit with me. I want them to do as many of their financial activities with me,’” he said.
But they struggle to meet customers’ other demands, such as near-instant payments and transparency, all while keeping fees low, he pointed out. 

“This is extremely costly [for banks] because of all the legacy infrastructure they have,” he said. “And so they are faced with the decision to either partner or build it themselves in-house.”

In 2023, Wise partnered with Bank Mandiri, Indonesia’s biggest bank by assets, helping it save its customers $2.3m in fees that year. Today, two of three transactions made by Mandiri customers through the Wise Platform are approved within seconds, Bansal said. 

Bank Mandiri uses Wise for money transfers involving 13 currencies, including US and Singapore dollars.

Wise has also partnered with MOIN, a South Korean-based cross-border payment company. As of November 2024, 60% of all its transactions are completed in under 20 seconds, he pointed out.

Fintech tie-ups help banks cut operational costs and improve customer service. Fintechs in turn gain scale and visibility, whilst being able to access cost-effective funding. It’s a win-win deal for all three parties.