eOriginal questioned marketplace lenders, banks, and key industry players at the recent LendIt USA 2017 Conference.
According to survey respondents, the anticipated growth in partnerships was despite the obstacles for collaboration, which include technology integration (38 per cent) and conflicting goals (27 per cent).
The overriding need for traditional financial institutions to adapt technology to their banking and financial operations is driving them to look at the wider industry for collaborations which will enable them to remain relevant and competitive. Traditional players know that partnering with fintech firms is the key to improved products and services for their customers.
Partnerships bring benefits for all parties, traditional players gain new technology, fresh thinking and increased products and services for their customers. New players get access to an established customer base and the endorsement of a well-established brand.
Some analysts believe banks are experiencing their ‘Kodak moment’ and those that don’t move soon they will be left behind. Alternative finance providers are closing the gap in regard to lending. According to figures from the BOE net loans to small businesses by the largest UK banks fell by a hefty £536m from December to January, and Funding Circle claims that in January its investors net lending to SMEs was higher than the banks. Zopa claims to be not too far behind.
The UK has already seen some partnerships between banks and lending platforms. Zopa,partnered with challenger bank Metro in 2015. Revolut recently announced a partnership with consumer P2P platform Lending Works.
In addition to more partnerships, alternative and traditional financial service companies will increasingly converge. Zopa applied for a banking licence in 2016 and white label technology recently announced by London-based financial services software company, Misys, gives traditional banks the opportunity to launch their own P2P lending platforms quickly and cheaply.