University of Oulu

Bank and Fintech competitive dynamics and the perceived value of partnerships in an open banking market environment

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Author: Niemelä, Miikka1
Organizations: 1University of Oulu, Oulu Business School, Department of Management and International Business, International Business
Format: ebook
Version: published version
Access: open
Online Access: PDF Full Text (PDF, 0.8 MB)
Pages: 82
Persistent link:
Language: English
Published: Oulu : M. Niemelä, 2019
Publish Date: 2019-06-12
Thesis type: Master's thesis
Tutor: Sipola, Sakari
Reviewer: Puhakka, Vesa
Sipola, Sakari


This thesis discusses the relationship of banks and Fintech companies in the changing European financial markets. In order to answer this thesis’ research questions regarding bank and Fintech competitive advantages and the perceived value of collaboration, a closer look at the underlying market conditions is required. A literature review of previous research reveals that new regulation in the form of Payment Service Directive 2 (PSD2) is being implemented to correct the poor competitive pressures and consequent lack of innovation in the European financial markets. The regulation aims to create more options for consumers and drive consumer benefit by opening the financial markets to new service providers. As a result, an increasing amount of Fintech companies enter the market space and create competitive pressures towards banks by providing superior customer experiences in specific niche service areas. This thesis provides a perspective on bank and Fintech relationship that goes beyond competition and discusses also the possible value of collaboration.

This thesis is conducted as a qualitative case study and the data is collected via theme-based semi-structured interviews with three executive-level bank representatives and six Fintech executives. The interviewees from the bank have extensive experience working with PSD2 and open banking related initiatives and Fintech partnerships. The six Fintech case companies originate from Sweden, UK, USA, Canada and Singapore, and all of them have previous experience collaborating with banks.

The key findings of this research conclude that bank and Fintech competitive advantages are complementary in nature. Banks are trusted actors in the market that benefit from an existing customer-base and established distribution channels, whereas Fintechs are fast, technologically capable, and have niche expertise in specific service areas. The complementarity of bank and Fintech competitive advantages creates opportunities for mutually beneficial collaboration models and incentives for the creation of platform solutions, where greater customer value can be achieved. While open banking and platformization are deemed to have significant effects on incumbents, the results indicate that PSD2 alone is likely to have a smaller effect on banks than suggested by previous research, as the effects are restricted to payments. PSD2 is, however, seen as a catalyst for the larger change towards open banking and platformization.

The findings of this thesis can be utilized by financial market stakeholders, primarily bank and Fintech executives, to position themselves strategically to the development of open banking and platformization. The results can also help bank and Fintech executives understand the core competences that are emphasized in an open banking market and furthermore, understand how to benefit from complementary competences via partnership. This thesis provides a clear managerial implication that bank and Fintech partnerships can unlock significant value for both parties.

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Copyright information: © Miikka Niemelä, 2019. This publication is copyrighted. You may download, display and print it for your own personal use. Commercial use is prohibited.