Fintechs and banks, a match made in heaven

By Thibault Dubois, Henning Heckman & Daan Vansimpsen (Vlerick Business School)

These past years financial institutions have accepted the existence of fintechs within their industry. This can be proven by looking at a survey PWC conducted in 2016. They observed that 32% of financial institutions are currently engaged in partnerships with fintechs versus 25% who do not deal in any way with fintechs. Note that many financial institutions operate as venture funds or simply do business with fintechs. This partnership trend is likely to keep rising because of the win-win situation it creates for both parties.

Financial institutions are partnering up with fintechs because of four main reasons. The first and most important reason is cost reduction followed by differentiation, improved customer retention and lastly, additional revenues. Fintechs, on the other hand, are partnering up with financial institutions to acquire access to a strong customer base, build business relationships, benefit from a well-established brand, gain access to financial resources and/or acquire access to know-how (e.g. regulations).


Lending especially, has seen many partnerships flourish over the past few years. Customer preferences for digital solutions have pushed traditional institutions to look for partnerships with fintechs who can serve customers through digital channels. To demonstrate this trend, a few use cases of partnerships between lending platforms and traditional institutions are listed below.   

OnDeck and JP Morgan Chase

This partnership is the biggest announcement to date and creates many opportunities for both parties involved. By using OnDeck’s underwriting technology, JP Morgan is now able to quickly offer business loans to its 4 million small business accounts. The loans remain on JP Morgan’s balance sheets and are also branded that way. In return, OnDeck receives an origination fee plus a servicing fee per loan issued. In addition, OnDeck now benefits from JP Morgan’s broad customer base and its powerful brand while JP Morgan is able to provide an enhanced customer experience. Small businesses can now simply apply for a loan online instead of going to the branch and wait for weeks before obtaining their loan.

Kabbage and Santander, ING and ScotiaBank

The partnership between Santander UK and small business lender Kabbage is motivated by the same reasons as the OnDeck – JP Morgan Chase partnership. Partnering up with Kabbage enables Santander to quickly provide online credit to its smaller business clients. Kabbage sees the partnership as a way to enter the UK market. Kabbage also has similar partnerships with ING to enter the Spanish market and with ScotiaBank to extend their presence in Mexico and Canada.

Other Partnerships in Lending

Other examples of known partnerships in lending are Avant and Regions Bank, Fundation and Regions bank, Lending Club and Union Bank, Lending Club and BancAlliance, Prosper and Radius Bank. 



Another strong cocktail for partnerships is that of insurtechs and reinsurers. Trov serves as a good example and demonstrates how partnerships between insurers and insurtechs can be beneficial.

Business model

Trov’s business model enables customers to ensure specific goods for a certain amount of time. By the end of the month customers pay the coverage for the events/items they have used. When a claim is issued, customers can interact with a chatbot included in the application. However, Trov does not carry the risk itself but it partners up with reinsurers who do the underwriting. 

Benefits partnership

Reinsurers can appeal to the younger generations by providing on-demand insurance.  Trov, on the other hand, does not need a large balance sheet to cover the risk. It has access to the partner’s large customer base, it benefits from the insurer’s regulatory knowledge and it can enter markets more easily through the partnerships. Trov is currently active in three markets due to partnerships: 

-          Australia 2016 - Trov and Suncorp

-          UK 2016 - Trov and AXA

-          US 2017 - Trov and Munich Re


Banks and Marketplace Lending Platforms: Ideal Partners?. Lean Academy. 

An In Depth Look at the OnDeck/JPMorgan Chase Deal. Lean Academy

Munich Re leads $45 million investment in 'insurtech' startup

FinTechs in Europe – Challenger and Partner. Roland Beger Study. 

Fintech Global Report. Pwc

AXA partners with Silicon Valley startup Trov to launch insurance 'as simple as Tinder' for British millennials

Trov partners with Suncorp Group to launch on-demand insurance. ZD Net