Bank-Fintech partnerships are a hot topic in bank boardrooms. A new report from Cornerstone Advisors entitled The state of the Union in bank-fintech partnerships, found that nearly nine in ten financial institutions consider fintech partnerships important to their business, up from 49% in 2019.

Overall, 65% of banks and credit unions have entered into at least one fintech partnership in the last three years and 35% have invested in a fintech startup.

Fintech partnership activities between banks have accelerated over the past three years. In 2019, banks collaborating with fintechs had an average of 1.3 partnerships per institution. This number rose to 2.5 partnerships in 2021.

For banks that have invested in fintechs, the average investment has increased over the past three years. Their average investment in fintech startups grew from $2.3 million in 2019 to almost $10 million in 2021.

The results of bank-fintech partnerships are disappointing

Why do financial institutions partner with fintechs?

Increasing credit volume and credit productivity were the most frequently cited goals, followed by the development of new products, cited by almost half of the respondents. This is a big change from 2019, when just 32% of financial institutions said developing new products is a goal of their fintech partnerships.