Many FinTechs rely on partnering arrangements with "established" Financial Services businesses to be able to include (often regulated) products and services in their end-customer offering.
This report by ClearBank raises some interesting concerns from FinTechs about the level of support that they are getting from their existing partner banks.
It should be flagged that ClearBank (the first new clearing bank in the UK for 250 years) is a tech-first provider of clearing and agency banking services and so they will always want to show how they can beat the legacy providers but there are still some thought-provoking points here. In particular around:
- Whether some banks have "transformed" enough to provide the level of Open Banking and API access which the market wants - Watch this space on that as the UK Competition and Markets Authority's consultation on the future governance of Open Banking is due to end this month.
- How some banks and FinTechs may compete with each other - The recent demise of some "flanker" FinTech brands which were set up by banks may mean that is less of an issue now but concerns about competition were a key driver of the Open Banking movement in the first place.
As we wait for the final rules from the PRA and FCA following their review of Operational Resilience in Financial Services it will also be interesting to see what implications those may have on the agreements between FinTechs and their partners.
"agency banking" is the process of a fintech offering its customers a service that is provided and managed by an authorised bank as the ‘agent’ of that service