Why Business Banking Must Embrace Fintech Partnerships in the AI Era

While partnerships bring many benefits, there’s often obstacles to collaboration between banks and fintechs. For starters, risk aversion is deeply engrained in banking culture, often for valid reasons given the regulatory landscape or issues with tech compatibility to existing systems.

At their core, banks are not technology companies—they are regulated entities that excel at deploying capital with the remit of managing risk. This specialization has historically served them well, but the current market demands a level of technological sophistication that many find challenging to achieve internally. Thinking of tech as a great equalizer, this is where a fintech partnership can help fill some gaps.

Fintechs enhance banking relationships by bringing unique strengths to the table. Their nimble development approaches allow for rapid digital transformation. With their openness to explore data-backed automation and AI, they can extract valuable insights from existing customer data. Most importantly, they help create seamless, user-centric experiences that modern corporate banking customers expect, such as enabling instant, AI-led risk decisioning, expanded payment solutions like the ability to pay by invoice, and seamless integration across business functions. 

Plus, the advantages go beyond local markets. As businesses look to expand globally, fintech partnerships can enable cross-border payment solutions and international growth opportunities that many banks would find difficult to achieve independently. Consider this: in the U.S. alone, companies must navigate more than  13,000 taxing jurisdictions, and international markets require careful attention to VAT requirements and product classification codes. Leaders are increasingly turning toward partners who can support payments complexity and cross-border nuances – an achievement made possible with the right financial service experts who can leverage technology and automation to keep track.

Opportunity for gradual implementation

Effective bank-fintech partnerships take a thoughtful approach to implementation. A "crawl-walk-run" strategy for AI adoption ensures proper regulatory oversight while gradually leveraging emerging tools for improved efficiency. This strategy should incorporate:

• Robust security frameworks to tackle threats like business identity theft and other forms of fraud. Despite the severe financial implications, most businesses recoup less than 10% of what is stolen by fraud according to AFP. This reality emphasizes the need for businesses to strengthen their defenses against this growing threat.