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Collaboration Between Banks and Fintechs Crucial to Combat Risk of Disintermediation

Financial institutions (FIs) servicing business clients are being disintermediated by fintech payment providers. A report from BNY Mellon, in collaboration with Aite-Novarica Group, has found that banks are slowing the trend by partnering with larger banks who have already built connections to fintechs.

The report – The Forces Disrupting Payments – showed that banks, community banks and credit unions continue to be at risk of disintermediation – when businesses circumvent their banks by engaging directly with fintechs – with only a third of businesses surveyed believing their FIs fully understand their payment needs. In fact, 62 per cent of the business respondents said they are already working with a fintech provider.

Overall, however, businesses said that they would rather partner with another bank than have to seek third-party fintech providers. Smaller banks, in particular, are finding it beneficial to partner with larger FIs that have already vetted and validated the numerous fintech payment options available.

“Banks need to solve for points of friction as their business customers show a greater expectation for robust, real-time capabilities,” says Isabel Schmidt, co-head of global payments at BNY Mellon. “Our experience is that clients who partner with financial institutions that are connected to fintechs and their capabilities stand a greater chance of success.”

“The threat of disintermediation is the impetus for a lot of innovation among banks as they collaborate with fintechs on new ways to drive growth,” says Erika Baumann, author of the report at Aite-Novarica Group. “This leads to a market opportunity for fintechs, as well as FIs that have reacted to market demand by developing robust services to fill the biggest gaps in their payment strategies.”

The report also reveals that 87 per cent of businesses have made significant or somewhat significant investments in improving their own organisation’s payments technology or processes. Despite this, those still planning to make an investment is still very high (88 per cent), presenting an abundance of market opportunities for fintechs and FIs who, together, come to market with effective, comprehensive payment services that can cater to a spectrum of client needs.

The findings of the report are based on feedback from a survey of 790 employees of midsized and large organisations in seven North American and European countries.


  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

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