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The marriage of banks and fintechs

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1 Dec 2021

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Four partnerships that will change your client experience.

Financial technology companies have been around for more than 100 years, and banks have long allied with them to deliver services. But, more recently came the rise of fintech startups. Banks and fintechs initially sought to compete. These days, they are thinking differently about each other.

Banks and fintechs are combining their strengths for their mutual benefit. The positive impact of the partnership is helping to support new business models and better ways of doing business, with far-reaching implications for clients and markets.

The partnership imperative

A collaborative approach has never been more important. The rise of digital ecosystems and accompanying regulatory changes to foster open banking have been key drivers in the evolution towards bank-fintech partnerships.

Open banking regulations have aimed to cultivate banking innovation while strengthening security for electronic payments and protecting financial data. They support an ecosystem approach to financial services delivery, for example, fostering the use of Application Programming Interfaces (APIs) that facilitate real-time interactions.

That’s vital amidst the increasing expectation for on-demand commerce and its impact to corporate treasury and finance as well as a company’s network of suppliers and partners. The COVID-19 pandemic has been a global accelerator of e-commerce and of the corporate urgency for digital solutions that enable real-time treasury and finance.

Combining complementary strengths

A strong model for an effective bank-fintech partnership involves identifying complementary skill sets and mutually supporting areas of expertise and capabilities that combine into unique value propositions. The resulting propositions, stronger than what a bank or fintech could deliver on its own, aim to solve practical problems and advance strategic objectives for clients and markets.

Banks excel as trusted providers with fiduciary responsibility in longstanding client relationships. They combine financial stability and scale with expertise in banking, regulatory, and compliance as well as having secure connectivity to banking infrastructure, such as payment clearing systems. Fintechs are known for disrupting entrenched ways of doing business.  They bring agile execution of the latest technologies, with a key focus on digitalisation, to accelerate speed-to-market. Both partners should bring innovative approaches in which each offers unique attributes and insights.

A partnership approach accelerates client access to that innovation. Meanwhile, banking clients can take advantage of the stringent due diligence that banks bring to vetting their fintech partners.

Connecting communities into more effective and efficient networks

Banks and fintechs each have their own client ecosystems. A partnership approach links these ecosystems while simplifying the connections between participants to make it easy to do business. A key benefit of joining forces is to connect communities efficiently, transparently, and securely to better manage risk, efficiently operate, stabilise supply chains and sources of working capital, and to enhance their performance – this becomes a platform for accelerating growth.

This affords an opportunity for a new level of interoperability that addresses longstanding challenges and enables transformational change for clients and their networks. Better, more efficient, and more effective ways of operating become the basis for successful new business models for both digital-native companies and for traditional businesses that seek to digitally connect to remain competitive.

Big ambitions for transforming the banking experience

At Standard Chartered, fintech partnerships are powering digital-first banking services that address diverse client needs. In the last 12 months, our partnerships and ensuing new capabilities have helped clients to connect quickly, easily, and seamlessly to banking services while improving financial access for their clients and suppliers or other ecosystem members such as institutional investors.


Enrolling suppliers quickly in supply chain finance programmes

Standard Chartered has partnered with Demica, a leading fintech with an intuitive, cloud-based platform to enable financial institutions and corporates to automate and scale their working capital solutions, on a new supplier enrolment portal. The supplier enrolment portal uses a digital front-end while providing the Bank’s enrolment team with intuitive dashboards for monitoring and sending updates to anchor companies. Suppliers can efficiently onboard to supply chain finance programmes while anchors gain transparency into the enrolment process.

This is the first phase of a strategic partnership between Standard Chartered and Demica. The two organisations will continue to explore ways to use Demica’s next-generation technology to transform Standard Chartered’s wider catalogue of working capital solutions.


Bridging the supplier-investor gap with a digital trade finance platform

Olea is a joint venture between Standard Chartered and Linklogis, China’s leading solution provider for supply chain financing, which brings together institutional investors with businesses requiring supply chain financing. Supply chain partners can access financing via transparent and frictionless processes. Investors gain access to a full range of trade finance assets globally, particularly in Asia, with credible insights on asset quality.

Olea’s rigorous risk analytics and secure platform offers investors access to investment options for returns that align with their risk profiles. The platform uses blockchain and artificial intelligence to provide a radically transparent, faster, and hassle-free way to access working capital for supply chain participants regardless of size while fulfilling institutional demand for alternative investments.


Providing SAP multibank connectivity to open banking

Increasingly businesses are operating in digital ecosystems, and transacting is moving towards real-time. To support business operations and enable efficient growth strategies, treasurers need on-demand open-access banking through their ERP systems.

Many of our existing solutions already follow the direction of open banking, reflected in our partnership with SAP Ariba, which allows clients to connect with multiple banks directly from the SAP Ariba platform. In addition to digital and e-commerce clients, we are seeing considerable take-up from a wide range of industries, such as insurance, automotive, fast-moving consumer goods, amongst others, for instant policies and distributor incentive programmes.


Easily connecting to on-demand transaction banking

APIs play a key role in the delivery of real-time treasury services. Corporates need to plug into APIs simply and securely to connect to multibank services through their ERP systems.

Standard Chartered’s partnership with FinLync, a global fintech company, enables clients to accelerate adoption of the Bank’s API offerings. The solution changes the banking experience by enabling quick API integration, easy multibank access, and a suite of transaction banking applications to support treasury activities. For example, instead of waiting for balance and transaction information to arrive periodically or at prescheduled times, the approach enables clients to access banking information when needed, through the desired applications.

As a result, corporate treasury and finance teams can quickly and easily connect to banking services via APIs. The approach supports clients in making the shift to real-time treasury and supports improved decision making, increased working capital efficiency, and reduced risks.