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Why fintechs cooperate with banks—evidence from germany

Abstract

We developed a conceptual framework to explain why young financial technology companies (fintechs) cooperate with incumbents from the finance sector. Examining 14 case studies on fintech-bank cooperation, we identified three main reasons: first, banks enable a fintech’s market entry; second, banks increase a fintech’s profits; and finally, banks enable new fintech products. We observed that each of these reasons is related to particular resources, which fintechs obtain through their cooperation partner. Additionally, we found that fintechs use different label approaches to sell their products when they cooperate with banks. Based on these results, we developed propositions that can be tested in future research.

Zusammenfassung

In der vorliegenden Fallstudie wird ein konzeptioneller Rahmen entwickelt, um aufzuzeigen, warum junge Finanztechnologieunternehmen (Fintechs) Kooperationen mit etablierten Finanzinstituten anstreben. Zur Untersuchung dieser Fragestellung werden 14 Kooperationen zwischen Fintechs und Banken in Deutschland betrachtet. Die Ergebnisse zeigen, dass Banken durch die Bereitstellung von bestimmten Ressourcen (1) den Markteintritt der Fintechs erst ermöglichen, (2) die Gewinne der Fintechs steigern und (3) an der Entwicklung neuer Produkte der Fintechs beteiligt sind. Darüber hinaus zeigt die Studie, dass Fintechs bestimmte Label-Varianten zur Vermarktung ihrer Produkte verwenden, wenn eine Kooperation mit einer Bank vorliegt. Auf Basis dieser Ergebnisse werden Propositionen entwickelt, welche in zukünftigen Forschungsarbeiten überprüft werden können.

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Notes

  1. This number refers to the year 2016. We have now identified 51 banks that cooperate with at least one fintech.

  2. Except for collaboration Alpha, where we also conducted interviews with bank managers.

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Correspondence to Hannes Maxin.

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We would like to thank our advisors Christoph Börner and Heidrun C. Hoppe-Wewetzer for very helpful comments and suggestions. The paper has also benefited from the comments of an anonymous referee, Hans-Gerd Ridder and numerous discussions with participants of the 22nd Annual Interdisciplinary Conference on Entrepreneurship, Innovation and SMEs, the 18th EURAM Conference, the HVB Doktorandenseminar 2017 and the Seminar of Leibniz University of Hannover.

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Bömer, M., Maxin, H. Why fintechs cooperate with banks—evidence from germany. ZVersWiss 107, 359–386 (2018). https://doi.org/10.1007/s12297-018-0421-6

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