Customer Centricity Reigns: How Bank-Fintech Collaboration Empowers End Users and reshapes Finance

Customer Centricity Reigns: How Bank-Fintech Collaboration Empowers End Users and reshapes Finance

Beyond disruption, the successful Irish bank-fintech collaborations paint a powerful picture of  a future shaped by partnership and healthy competition. They prove how Fintech agility can support banking stability, forstering a more dynamic and customer-centric financial services ecosystem, writes Richard Warren-Tangney, FS Partner in the latest Finance Dublin publication.

The financial services industry is undergoing a significant transformation driven by the ongoing rise of Fintech (financial technology) organisations. These innovative companies continue to leverage technology further disrupting traditional banking models which remain slow to react, offering a more comprehensive range of services with greater convenience, efficiency, and, often, lower costs.  

Initially associated with small startup ventures, Fintech has evolved over the last ten years into a multi-billion-dollar industry with over 3.5 billion global users1. Online and mobile banking, digital payments, cryptocurrency and blockchain, Insurtech, Wealthtech, Regtech and AI all classify as Fintech, combining innovation with technology vexing the status quo of incumbent financial services providers.  


The effect beyond Financial Services 

Fintech companies haven’t stopped at expanding solely the services in the financial sector – they’ve fundamentally changed how customers interact with their money, altering consumer behaviour across the whole industry. This marks not just a fleeting trend but an evolution that has redefined the contours of the banking sector. 

A surprising narrative has emerged more recently, however: collaboration, and not competition, might be the key to unlocking the full potential of this transformation. 


A history of disruption – Market Dynamics  

Traditionally, banks held a dominant position, offering a limited range of financial products and services delivered through physical branches. Fintech's initial impact was adversarial. Their agility and focus on user experience exposed the limitations of legacy bank systems. Mobile-first experiences, streamlined applications, and innovative financial products like peer-to-peer lending and robo-advisors challenged the dominance of traditional banks. 

A 2023 study by The Federal Reserve Bank of Philadelphia2 in the US found that changes in lender quality, including both consumer preferences for better financial services and advancements in finance technology, account for over 50% of the rise in Fintech market share and 40% of the decline in traditional bank market share. Their analysis further suggests that technological innovation within the Fintech sector is a major driver of its disruption and success. 

Fintech's impact also acts as a powerful driver of economic growth and efficiency in the economy, including: 

  • Reduced friction and increased access: Fintech solutions like mobile payments and microloans bypass traditional hurdles, fostering financial inclusion and boosting economic participation. 
  • Innovation & Competition: New Fintech players challenge incumbents, pushing the boundaries of financial products and services. This benefits consumers with wider choices and potentially lower costs. 
  • Unlocking new opportunities: Innovative technologies streamline cross-border payments, trade finance, and regulations, opening doors for increased international trade and investment.

Classic economic forces like economies of scale still play a role. Large, multi-product providers leverage customer data across a broad range of services, potentially leading to consolidation. The key is striking a balance. Fintech's disruptive potential can coexist with established institutions within a well-regulated ecosystem. This collaboration fosters innovation and competition, ultimately benefiting the economy by creating a robust and efficient financial sector for all. 


Banks' efforts to remain competitive 

Fintech firms are playing a crucial role by filling gaps in the market, serving underserved segments, and ultimately expanding the overall financial services landscape. This compels traditional banks to re-evaluate their strategies and identify areas of true excellence, including superior customer service, a more comprehensive range of products, or leveraging their vast data for deeper financial insights. 

While the banking sector has undergone profound transformation and volatility throughout economic crises, the COVID-19 pandemic, and geopolitical turmoil, it has maintained profitability and has proven remarkably resilient to such risks. The rise of Fintech presents a new challenge, one that demands not just resilience but a proactive embrace of innovation.  

According to banking executives, the digitalisation of financial services and the rise of digital currencies emerge as the dominant trends expected to shape the industry over the next decade. A staggering 54% of the companies surveyed by Economist Impact & SAS3 in 2022 identified these areas as the highest perceived opportunities. This focus underscores the banking sector’s recognition of the need to embrace technological innovation to remain competitive in the face of Fintech disruption.  


Customer behaviour and increased expectations 

The rise of Fintech reflects a fundamental shift in customer expectations. Today's tech-savvy consumers demand seamless digital experiences across all financial services. Fintech firms cater to this demand with user-friendly mobile apps, intuitive interfaces, and a strong focus on personalisation. 

This has prompted traditional banks to rethink their customer engagement strategies to retain loyalty and attract new clients. These strategies could encompass everything from streamlined onboarding processes to leveraging data analytics and machine learning for personalised financial advice. Furthermore, the evolving landscape demands transparency and user control over financial data. Advanced technologies are addressing these needs by offering real-time transaction tracking and enhanced control over personal financial information. This empowers customers and fosters a sense of trust with their financial institutions. 

Soon, the ability of traditional banks to adapt to these expectations will be a critical differentiator. 

The Future: Collaboration or Competition? 

Many forward-thinking banks are recognising the power of strategic partnerships with Fintech firms. These partnerships are not about competition but rather about leveraging each other's strengths while aiming to minimise weaknesses. Both sides acknowledge the potential benefits of working together: 

  • Fintech firms with an agility and innovation-focused culture find in technology a tool to level the playing field, offering services that challenge the status quo. They bring expertise in user experience design, cutting-edge technologies, and a deep understanding of customer expectations in the digital age. 
  • Traditional banks, on the other hand, contribute their regulatory expertise, established customer base, and robust risk management frameworks. They can leverage their existing infrastructure and navigate the complexities of regulatory compliance, ensuring a smooth integration of technology.

In the short-term, we can expect an increased emphasis on banks adopting cloud computing, artificial intelligence, and top-class technology not only to match Fintech offerings but also to find new ways to differentiate themselves. 

A Winning Partnership Formula: Fintech Agility Meets Bank Stability 

Banks Leverage Fintech Agility 

  • Fintech firms are renowned for their innovative spirit. By partnering with Fintech firms, traditional banks can gain crucial access to this agility, allowing them to introduce new technologies and services rapidly. This can be anything from integrating cutting-edge AI-powered chatbots for customer service to launching innovative mobile banking features that enhance user experience. 

Real case scenario4: Collaborations like PTSB and CreditLogic showcase how banks can leverage Fintech agility to streamline processes and modernise offerings, keeping them competitive in a rapidly evolving landscape. 

Fintech Gains Stability and Expertise 

  • Scale and Stability: Partnering with a bank allows a Fintech firm to tap into the bank's established customer base and robust infrastructure. This not only provides immediate access to a wider audience but also offers the stability and security that fosters trust with potential customers. 
  • Regulatory Expertise: Navigating the complex regulatory environment of the financial services industry can be a major hurdle for Fintech firms. By partnering with a bank, Fintech firms gain access to the bank's deep understanding of regulations and compliance requirements, allowing them to operate within the legal framework and avoid potential roadblocks. 

Real case scenario5Partnerships like the one between Bank of Ireland and WorldFirst allow Fintech companies to tap into vast customer bases and regulatory know-how, accelerating growth and ensuring compliance. 


Ireland: A Model for Collaboration 

According to Fintech Ireland6, which tracks and promotes the Irish fintech ecosystem, there are 280+ indigenous and 130+ international fintechs operating in and from Ireland. Ireland serves as a prime example of a successful regulatory framework that fosters collaboration. The market actively promotes initiatives like regulatory sandboxes, which provide a controlled environment for testing innovative Fintech products and services.  

The impact of this supportive infrastructure and collaborative spirit does not affect only the banks and fintech but the market in general, enabling: 

  • An Enhanced Customer Experience: Partnerships like AIB and Boxever demonstrate how Fintech can personalise customer interactions, leading to a more engaging and efficient experience for bank customers. 
  • Democratisation of Finance: The KBC and Objectway joint venture exemplifies how Fintech can empower individuals. User-friendly investment tools created through collaboration increase financial inclusion for the broader population. 
  • Strengthened Security and Efficiency: Ulster Bank and Circit's collaboration highlights how Fintech can enhance security and compliance processes for banks, ultimately benefiting the entire financial system.

This collaborative approach allows banks and Fintech firms to navigate the evolving regulatory landscape together, mitigating risks and accelerating innovation. Ultimately, this creates a win-win scenario for all stakeholders - banks, Fintech firms, and, most importantly, consumers who benefit from a more secure, efficient, and innovative financial services ecosystem. 


Conclusion: The rise of customer-centricity in the digital age 

The customer is no longer comparing banking institutions, but experiences. They consider speed, accessibility, responsiveness, and security while prioritising choices and constant effort for improvement.  

Beyond disruption, the successful Irish bank-fintech collaborations paint a powerful picture of a future shaped by partnership and healthy competition. They prove how Fintech agility can support banking stability, fostering a more dynamic and customer-centric financial services ecosystem. 

Change and evolution are inevitable and welcomed in the financial services industry. While banks and fintechs gain from each other’s presence, the ultimate winners are the customers and the wider economy, who benefit from a more efficient, inclusive, and competitive financial landscape.  


About the author

Richard Warren-Tangney, Partner in Financial Services at BDO in Ireland, brings a wealth of experience in guiding business growth across Fintech and Banking sectors. BDO Ireland, recognised for its expertise in audit, tax, advisory, and consulting, supports the financial industry's evolving needs with a global perspective and tailored solutions. 


  1. Business News, Fintech in Ireland.

For more industry-related insights, browse the Financial Dublin Yearbook 2024.