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Industry insights

Why Major Banks Struggle to Innovate: A Deep Dive into the Fintech-Bank Collaboration

Ondřej Machač
min read

Banks are at a crossroads between conservative survival or gradual implementation of new technologies and adaptation to their customers' requirements. Although they have considerable resources and a solid client base, they do not always manage to adapt in time. In this article, we will explore the key reasons for this and highlight the importance of building a spirit of innovation, engaging in technology development and partnering with fintech firms.

A call for innovation in banking

The world of banking, always holding fast to its traditional values. However, it faces huge barriers when trying to keep up with the innovations and customer demands that today's digital era brings. The challenge is not just to implement new technological advances, but more importantly to overhaul the entrenched processes, attitudes and beliefs that command these conservative financial institutions.

More than 16% of respondents globally are already comfortable with the full digital experience of branchless institutions. Many consumers are looking for a higher level of engagement from their financial institutions. The data comes from IBM's 2023 survey.

Cultural barriers to innovation

Tradition vs. Innovation

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Banks have historically favored stability and risk aversion over bold innovation. This cultural mindset creates something of a barrier to the adoption of new technologies and business models that could potentially disrupt the status quo.

The inherent caution of banks and regulation stifles creativity and experimentation. Without a willingness to take calculated risks, banks face the challenge of breaking out of traditional operating models.

Customer approach

Understanding customer needs

Innovation should be driven by understanding customer needs and behaviours from the data the bank has. Banks that thrive on innovation are those that place customer experience at the centre of their development strategy.  

Two-thirds (67%) of businesses have experienced at least one failed transformation of their bank in the last five years. A recent EY survey on transformation in banks identified multiple reasons for failure, one of which is a lack of customer focus.

But here's the rub: most banks think their transformation initiatives are customer-centric, but they are not. They may conduct customer surveys and examine their net promoter score (NPS). They may even have a chief customer officer. The EY study talks about why allocating at least 15% of the budget to customer orientation is worthwhile and how it pays off.

Improving customer experience through innovation

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* Based on the general EU model. Example of €50 spent. Our approach is ready for CO2 tracking on the merchant level once possible.

By focusing on improving the customer experience, banks can develop innovative products and services that truly meet the growing demands of their clients. Dutch neobank bunq has also gone in this direction, targeting Generation Z who care about sustainability. That's why, together with TapiX, it has introduced EcoTrack, a service that evaluates the CO2 footprint of customers' payment data.

At bunq, we believe that every small decision can create a big impact on our planet. Thanks to CO2 insights in the bunq app, our users get instant information about the green impact of their purchases and can start shopping sustainably.“
Samantha de Groen, Product Marketing Manager at bunq

Human capital and investment in technology

The shortage of skilled professionals and the high cost of technology investments pose significant challenges for banks seeking to innovate. For these reasons, it is often better to find a reliable partner to assist in innovation. This can speed up the introduction of the innovation and increase competitiveness.

When enemies become allies

Partnering with fintech companies allows banks to incorporate innovative ideas and technologies into their internal processes. Such collaborations can significantly accelerate the pace of innovation and give banks a competitive advantage.

Almost 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.

Panel discussion

The speakers discussed the challenges and opportunities of collaboration between traditional banks and fintech companies. They emphasized the need for open communication and a willingness to learn from each other in order for partnerships to be successful. Regulatory support and a conducive environment were also identified as important factors for the success of such partnerships.

There are many other success stories of banks and fintech companies working together to develop innovative solutions that redefine the banking experience for customers. You can read how bank and fintech partnerships are improving banking for consumers and small businesses in Forbes, for example.

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Using data for business intelligence

Data is essential for driving innovation. Banks that can effectively use the information that data offers gain valuable insights for their decision-making and strategic planning. By analysing data, they are able to identify current trends, assumptions and behaviours of not only their employees, but most importantly their customers.

Advanced algorithms can optimize banking operations, improve customer experience and reduce costs. Implementing data-driven algorithms is key to improving performance and competitiveness. For example, together with Dateio fintech, you can prepare meaningful incentives in the form of discounts for your clients. What are the benefits for the bank?

  • Increased daily active users in digital banking
  • Increased card usage / higher GMV
  • Loyal client base


The transition to innovation in banking is challenging, but the benefits it can bring are significant. By adopting a culture of innovation, investing in technology and partnering with fintech companies, banks can overcome their traditional limitations and become pioneers in offering financial solutions that respond to the changing needs of their clients.

About author

Ondřej Machač

Executive officer

Specialist in building (not only) business relationships. A FinTech evangelist who can't even make tea without technology

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