Strategies for Banks to Stay Relevant in Fintech

The Strategic Trifecta: CVC, BaaS and Embedded Finance When these 3 strategies operate in harmony, banks & FIs unlock a strategic trifecta — combining capital, infrastructure, and distribution. This alignment doesn’t just drive financial returns but creates ecosystem value that compounds over time. Three topics that fascinate me - are often discussed in isolation. But what if banks could align these strategies to create exponential value for shareholders while also mitigating risks inherent in working with innovative startups? The answer lies in synergy. 💡Unlocking Value Through Strategic Alignment: Banks are at a unique crossroads. On one side, CVC arms are pouring millions into fintechs and startups, seeking the next big disruptor. On the other, BaaS and Embedded Finance strategies are reshaping how banks distribute products and reach new customer segments. Yet, in many cases, these strategies operate in silos — missing the opportunity to create a cohesive growth engine. By aligning CVC investments with BaaS and Embedded Finance strategies, banks can: 1️⃣ Accelerate Innovation with Purpose: CVC investments shouldn’t just be about financial returns. By strategically investing in startups that can plug directly into a bank’s BaaS or embedded finance ecosystem 2️⃣ Create a Closed-Loop Value Chain: Imagine a scenario where a bank invests in a promising payments startup, integrates it into its BaaS platform, and enables that solution to be embedded into non-financial customer journeys. This creates a “flywheel effect”: the startup gains traction, the bank’s BaaS offering expands, and both parties benefit from shared growth — driving shareholder value exponentially. 3️⃣ Mitigate Startup Risks Through Embedded Oversight: One of the biggest risks banks face when partnering with startups is compliance and operational risk. By integrating portfolio companies into their BaaS infrastructure, banks can impose better oversight — from KYC/AML to transaction monitoring — effectively de-risking partnerships while still fostering innovation. Also, it works the other way too - when working with early stage startups, banks can use their CVC investment to derisk the operating outcome 4️⃣ Future-Proof Against Future Disruption: The fintech space is rife with disruption. By aligning CVC with BaaS and embedded finance strategies, banks not only invest in disruptors but also become part of the “disruption”. It’s a defensive and offensive play — allowing banks to evolve alongside market shifts rather than be blindsided by them. The question is no longer should banks align these strategies — but how fast can they? The smart ones are already doing it. 💬 Would love to hear your thoughts on the above ☝️ #CVC #BaaS #EmbeddedFinance #Fintech #CorporateVentureCapital #InnovationStrategy #BankingTransformation #StrategicInvesting

With some impressive fintech/legacy partnerships announced in 2023 (see: JPMC/Vestwell, USAA/Trust & Will, BMO/Modern Treasury), we’ve entered a new era for fintech and bank dealmaking marked by nimble technology companies who know what it takes to sell into larger organizations and bank partnership teams who can deftly get deals over the line. I’ve noticed an emerging dynamic, however: the capability gap between banks who can partner well and those who cannot is widening. This chasm will only grow larger as leading firms commit more resources to strengthening their partnership muscle, leaving lagging banks behind. Here are a few observations on what high performing partnership organizations are doing to stand out: They are actively sourcing: You’ll find them at fintech ecosystem events and meetups connecting with founders who can move the needle for the bank’s strategic priorities. Simply put, they aren’t relying on their bank’s name to win partnerships; they’re pounding the pavement to give their institutions signal advantage and a trusted brand as a strong and committed partner to emerging players. They have a clear understanding of where the appetite for partnerships lies within their institutions: Some P&L leaders may hesitate to introduce new complexity or risk within their organizations, making a partnership with an upstart virtually impossible. High-performing partnership teams know which business lines have a desire to partner with the fintech ecosystem, and have identified champions that have the impetus to drive change. They maneuver internal processes well: This one seems obvious but probably the hardest to manage. Getting alignment within matrixed organizations like banks is no easy task, especially when procurement teams are more accustomed to working with larger technology providers and not early-stage companies. Lately, I’ve seen more partnership teams work with TPRM and other governance colleagues to develop vendor risk management frameworks to optimize partnership timelines. They have access to technology talent: Though this tends to favor larger banks, effective partnership teams either have implementation talent internally or have access to teams who can navigate the challenges of integrating partner solutions. In the absence of a formal alliance agreement, many system integrators don’t have the bandwidth or risk appetite for a relationship with an early-stage company, so the onus often falls on the partnership team to get the implementation right. They lean on their venture capital network: VC firms can be productive sources of intros, particularly if the bank is a limited partner in the VC’s funds. These LPs expect strategic value alongside financial returns, so partnership teams should feel empowered to ask their VC partners for curated intros. In short, winning the partnerships battle often comes down to a series of small actions done incrementally well by talented teams that can compound into tremendous results.

I have always said that partnerships are catalysts for transformation in Financial Services. This week’s announcement that Fifth Third Bank is partnering with Brex to power its commercial card program is more than just a fintech headline—it’s a signal of how financial institutions can accelerate innovation by leveraging external partners to upgrade their API and technology suite. Rather than building everything in-house, Fifth Third is embedding Brex’s API-driven payments infrastructure and AI-native finance tools directly into its offering. This move underscores a critical truth: banks don’t need to reinvent the wheel to deliver cutting-edge digital experiences. By partnering with fintechs that specialize in APIs, automation, and AI, institutions can: · Modernize faster without the burden of legacy tech debt · Scale intelligently by integrating best-in-class solutions · Stay competitive in a landscape where clients expect seamless, real-time financial management The Brex–Fifth Third collaboration is a blueprint for how incumbents can remain relevant: embrace embedded finance, adopt API-first architectures, and lean into partnerships that unlock speed and innovation. As financial services continue to evolve, the winners will be those who recognize that partnership is not a concession—it’s a strategy.

🏦 The Next Technology Evolution for Community Banks: Innovation with Purpose Community banks have long been pillars of trust, personal service, and local connection. Yet the banking landscape is changing faster than ever, driven by digital expectations, cybersecurity demands, and competition from fintechs and large financial institutions. To remain relevant and resilient, community banks must evolve technologically — not by spending more, but by investing smarter. Competing in a Rapidly Digitizing Market Customers now expect seamless digital experiences: mobile onboarding, instant lending, 24/7 access, and proactive fraud alerts. Competing in this new environment doesn’t require the scale of a national bank; it requires clarity of purpose and targeted investment. The goal is not to chase every new technology, but to select those that directly enhance client experience, operational efficiency, and security. Smart Investment: Doing More with Less Digital transformation doesn’t need to be overwhelming. Cloud-based core platforms, API-driven integrations, and AI-enabled analytics now offer modular, scalable paths forward. These solutions allow community banks to modernize incrementally, achieving measurable results while maintaining financial discipline. Strategic modernization can streamline operations, improve risk management, and empower employees to focus on what matters most — building meaningful relationships with customers. The Power of Strategic Partnerships Partnerships are essential to this evolution. Collaborations with fintechs, technology providers, and shared-service networks enable community banks to access innovation without bearing the full cost or complexity of development. Open-banking ecosystems and API connectivity make it possible to deliver competitive digital experiences while preserving each institution’s agility and local insight. Client-Centric Transformation At the heart of every technology decision should be the client. The purpose of innovation is not to replace human interaction, but to enhance it — transforming data into understanding and automation into personalization. Community banks that succeed will be those that integrate technology into their culture of service, ensuring every digital improvement translates into a better client experience. Information Security: A Strategic Imperative As operations expand into the cloud and third-party integrations multiply, protecting customer data becomes non-negotiable. Robust information-security frameworks preserve not only compliance, but the very foundation of client trust. The Path Ahead The future of community banking will belong to institutions that combine innovation, prudence, and partnership. By investing wisely, collaborating strategically, and keeping clients at the center, community banks can remain vital players in a digital world — bridging tradition and technology to deliver the next era of trusted financial relationships.

Even though (many) banks have seen #openbanking as an unnecessary and costly regulatory burden, the truth is that they would have to invent it had it not existed – to rephrase Voltaire. Let’s take a look. Open banking brings a mentality change: from a traditional, vertically integrated, static set-up to a dynamic environment where APIs offer ubiquitous, easy and straightforward connectivity among incumbent and challenger players alike. For banks it is their best chance in decades to transform by leveraging the enormous potential of the API #economy. Despite the different approaches, open banking is about facilitating #innovation by democratizing the flow of #data. But it's not a business model in itself. It does, however, facilitate the introduction of new, revolutionary concepts, which change how financial services are delivered and consumed. The most impactful new business models are what we call Banking as a Platform (BaaP) and Banking as a Service (BaaS). Even though they are sometimes confused, they are not quite the same, but they are the two (different) sides of the same coin. Let me explain: - Banking as a Platform: the bank is actually the platform and owns the delivery channel, however it does not (necessarily) own all the services but rather aggregates them (via APIs) from third parties (i.e. fintech players). The model could be relevant for larger and smaller banks alike: larger players that have the resources and the customer base to build an ecosystem around them or small challengers that want to grow and cannot afford to develop any of the offerings in-house. - Banking as a Service: the bank takes a back-seat role and provides the infrastructure (technical platform, licensing or additional services), so that client-facing partners can do the customer acquisition. Essentially BaaS is what sits behind the huge transformation of embedded #finance. You can think of BaaS as the bottom layer, the enabler behind embedded finance, which, in turn, refers to the outcome and is normally to be found one (or more) layers above BaaS. What is not yet fully understood is that the BaaS model creates opportunities not only across the entire value chain but also for very different banking players, i.e. from Goldman Sachs sitting behind Stripe Treasury and Apple Card to smaller banks without innovation expertise. Although it might sound controversial, banks today are not in lack of choice. On the contrary, their spectrum of choice as to what they might become is the richest they ever had. But it depends on 3 factors: 1) their willingness to adjust 2) having the right strategy in place and 3) (above all) execution. Look at each one separately and none seems beyond reach. Put them together and they become tricky, however it is the combination that will set apart winners from losers for years to come. Opinions: my own, Graphic source: Kapronasia, Embedded Finance Future in Asia

Banks talk about innovation. But how many actually execute it? For years, I've seen banks struggle to turn innovation into action. They know they need to evolve, but the roadblocks are everywhere: 🚧 Fear of fintech competition: Instead of seeing fintechs as enablers, they see them as threats. 🚧 Overcomplicated pilots: Too many internal hurdles stall momentum before innovation can even take off. 🚧 Lack of clear success metrics: Without defined KPIs, how do you know if your innovation efforts are working? But here is the truth: Innovation isn't just a project - it's a *strategy* Thats why I created the Banking Innovation Roadmap - a simple, tactical framework to help banks move from concept to market leadership. This isn't about adding another buzzword to your strategy - it's about real execution. A strategic approach to innovation includes 👇 ✅ Discovery & Roadmapping: Understanding your bank's goals and aligning innovation to real business outcomes. ✅ Proof of Concept Development: Testing real solutions with fintech partners in a way that's controlled and measurable. ✅ Strategic Partnerships: Banks, fintechs, and organizations like FIS coming together to create new solutions that don't exist today (ahem, FIS + Affirm collab!) ✅ Modernization & Open Banking: Without the right infrastructure, innovation can't scale. ✅ Market Insights & Thought Leadership: Staying ahead of trends and leveraging industry expertise to guide decision-making. The banks that succeed don't wait for innovation to happen - they structure it, measure it, and operationalize it. I'll be diving more into this framework as I continue to iterate it. Most importantly: I WANT TO HEAR FROM YOU! Am I missing anything? What's the biggest roadblock you see when banks try to innovate? Drop your thoughts in the comments! #bankinginnovation #fintech #innovationstrategy

🌎 Transforming Traditional Banks and Credit Unions: Lessons from Experience and Insights for the Future 🌎 After 21 years with ING Direct and Tangerine across several countries—and working with tech and fintech firms since—I’ve seen how transparency, customer-centricity, and innovation can transform banking. Yet here we are in 2025, and many banks and credit unions still face the same challenges we tackled years ago. 🤔 Customer Satisfaction Is Still Low Capgemini’s 2025 Retail Banking Report shows only 26% of customers are satisfied with their experience. As 💯 Jim Marous put it, banks may not be seeing mass exits, but they’re facing silent attrition—customers quietly moving products to neobanks like Nubank, Revolut, Stripe, Robinhood, Chime, and SoFi. Why is progress so slow? 🤬 Where the Friction Lies 1. Legacy Systems – Outdated tech makes it hard to offer seamless, personalized experiences. 2. Regulations – Compliance slows innovation—but it doesn’t stop it. 3. Cultural Inertia – Resistance to change is deeply embedded. 4. Data Silos – Fragmented systems mean fragmented customer views. 5. Fintech Competition – Agile, digital-native players are redefining expectations. 💪 Let’s be clear—THESE ARE NOT BARRIERS. They’re frictions. Frictions can be solved. Some of us built banks in environments where regulators hadn’t even imagined branchless banking. 🚀 Strategies for Transformation 🚀 1. Culture First – Customer focus must be embedded in the culture. Break silos, reward collaboration. 2. Modern Tech – Move to flexible, cloud-based platforms. Use AI and data to personalize. 3. Agility – Embrace iterative development. Test, learn, improve—fast. 4. Fintech Collabs – Partner with or acquire innovators to accelerate capability. 5. Customer-First Design – Simplify processes. Build trust through transparency. 6. Engaged Teams – Empower employees. Happy teams create loyal customers. Final Thought This isn’t about knowing what to do—it’s about doing it. Change is possible. I’ve seen it. Led it. Delivered it. So can you. If you're a bank, credit union, neobank or fintech ready to make real progress, I’d love to help. Whether in a C-level role or as an advisor, I bring experience that turns strategy into impact. David Bradshaw Andrew Chau Phil Taylor, FICB/FCSI American Banker Aline Badr PCC Brenda Rideout Stacey Schwartz Michael Giller Michael Aceto Gaurav Singh Mark Nicholson

The Secret to Successful Bank-Fintech Partnerships? Deep Understanding and Shared DNA. After years of working inside both banks and fintechs, I've noticed that the most successful partnerships aren't just about passing audits or flashy tech—they're built on a foundation of mutual understanding and genuine appreciation for each other's worlds. The strongest partnerships go beyond surface-level collaboration. The magic happens when both sides begin to blend operating models. I've helped banks adopt iterative and more agile approaches to delivery, as well as built fintechs that embed governance, risk management and compliance into their organizations. Want an accelerator? Embed understanding into your DNA by strategically bringing in talent from both sides. Banks - recruit fintech leaders to drive innovation, and fintechs - hire experienced bankers to strengthen governance, risk and compliance. This cross-pollination of expertise doesn't just bridge gaps—it transforms cultures. Oversight becomes collaboration, and different perspectives and experiences create stronger solutions. Teams with mixed DNA are faster to find the sweet spot of innovation, execution and compliance. This isn't compromise—it's evolution. The future is creating organizations that combine the best of both worlds. The result? Organizations and partnerships that don't just survive, but thrive. #fintech #banking #partnerships #innovation #talent #collaboration #transformation