The financial services landscape is rapidly evolving, and institutions of all sizes face an increasing need to adapt and innovate. As consumer expectations rise and technology continues to disrupt traditional models, many financial institutions (FIs) are realizing that strategic partnerships with FinTech companies are no longer optional—they’re essential for survival and long-term growth.
I recently sat down with Angela Murphy, Ph.D., an expert in financial technology partnerships, several key insights emerged about the power of collaboration between financial institutions and FinTechs. Let's dive into the future of financial services and how FIs can leverage FinTech partnerships to stay competitive.
The Value of Collaboration Over Competition
There’s a common fear in the financial industry that partnering with FinTechs might result in losing control over customer relationships or, worse, alienating loyal account holders. However, Dr. Angela Murphy, who’s been deeply involved in this space for years, assures us that this fear is largely misplaced.
These third-party providers don’t want your customers, Dr. Murphy points out. What they want is for your institution to be able to provide better tools and services to your account holders.
By working with FinTechs, financial institutions can offer innovative solutions that enhance the customer experience—whether it’s improving payment speed, offering personalized financial products, or ensuring better security. While FinTechs may not maintain personal relationships with users the way traditional banks do, they often provide the convenience and flexibility that consumers increasingly demand.
Instead of fearing that FinTechs will steal customers, it’s time for FIs to recognize that the customer relationship is evolving. The rise of services like PayPal, Square, and Venmo demonstrates that customers are willing to use digital platforms for convenience—even without a deep personal connection. The key is to maintain strong relationships by enhancing your service offerings through thoughtful partnerships.
The "Amazon-ification" of Customer Expectations
Dr. Murphy also discusses how customer expectations in financial services are being shaped by the same forces that have transformed other industries—chiefly, the tech giants like Amazon. Consumers now expect on-demand, frictionless service, and that’s bleeding into their financial interactions. “The Amazon-ification of customer expectations” has led to a demand for faster, easier, and more personalized financial experiences.
FIs must now deliver services that are just as quick and easy to use as shopping on Amazon. This means implementing modern technologies, offering instant payment solutions, and providing seamless digital experiences across platforms. If financial institutions can’t meet these expectations, they risk losing relevance in an increasingly tech-driven world.
Risk Management in FinTech Partnerships: Overcoming Hesitations
One of the most common concerns financial institutions have when considering a FinTech partnership is risk—especially third-party risk. Managing the risks associated with handing over customer-facing operations to a third-party provider can be intimidating, particularly when it involves sensitive data and complex compliance regulations.
The good news is that as FinTech partnerships become more common, there are now more resources and tools available to help FIs navigate this landscape. Dr. Murphy suggests that institutions should embrace collaboration with FinTechs as a strategic choice to optimize revenue and reduce risk—if they’re working with the right partners. Experienced FinTech companies understand the regulatory landscape and can work with FIs to ensure compliance while delivering secure, innovative solutions.
In fact, many third-party providers already have robust risk management frameworks in place. Financial institutions can take advantage of these to improve their risk posture while gaining access to cutting-edge technologies and services.
Future Opportunities in Financial Services: The Role of Collaboration
Looking ahead, the B2B payment space presents a major opportunity for growth. The biggest revenue opportunity for financial institutions in the next three to five years is going to be creating a payment strategy centered around treasury and commercial payments, Dr. Murphy explains.
For smaller institutions—community banks and credit unions in particular—this is a chance to “punch above their weight.” While larger players may have the resources to dominate the market, smaller institutions can differentiate themselves by partnering with FinTechs that offer agile, off-the-shelf payment solutions. These partnerships enable smaller FIs to offer competitive services like real-time payments, which could otherwise be out of reach.
The future isn’t just about individual consumer banking, though. The B2B sector is growing, and businesses are increasingly looking for ways to streamline payments, reduce friction, and integrate finance into their operations. “Embedded finance solutions” are becoming a must-have for companies, and if FIs are able to offer these, they become indispensable to the organizations they serve.
Another key area for growth is fraud prevention, and this is where artificial intelligence (AI) plays a crucial role. Dr. Murphy urges financial institutions to leverage AI to stay ahead of fraudsters, who are often a generation ahead in their tactics. By implementing AI-powered fraud detection, FIs can significantly reduce risk while protecting both their account holders and their bottom line.
Preparing for the Future: How Can Financial Institutions Navigate Challenges?
Collaboration with FinTechs isn’t without its challenges, but the potential rewards far outweigh the risks. The key is to have a clear strategy and a willingness to innovate. Institutions that want to stay ahead must focus on their core goals and determine where they can most benefit from external partnerships.
For smaller institutions looking to remain competitive, Dr. Murphy offers this advice: Run an analysis on your institution’s payment behavior and manual processes. Identify where the low-hanging fruit is, and partner with FinTechs to optimize those areas. This could involve digitizing payment systems, improving operational efficiency, or using AI to automate routine tasks—each of which could help institutions save money and reduce operational overhead.
The role of AI in automating manual processes is especially important. Rather than seeing AI as a threat to jobs, Dr. Murphy emphasizes that AI should be viewed as a tool—a supplement to the existing workforce that can help save time, reduce costs, and improve overall efficiency.
Conclusion: Embracing Collaboration for Long-Term Success
The financial services industry is undergoing a dramatic shift, and the future belongs to those who are willing to adapt. By embracing collaboration with FinTechs, financial institutions can offer more personalized services, reduce operational risk, and improve their bottom line. The key is to approach partnerships strategically, ensure alignment with institutional goals, and focus on long-term growth.
If you’re curious about FinTech partnerships, don’t be afraid to reach out, says Dr. Murphy. There are no dumb questions. If you need guidance, there are resources out there to help you make the most of this opportunity.
As we move forward, the ability to collaborate effectively with FinTechs will separate the leaders from the laggards. Financial institutions that get it right will position themselves for success, ensuring they meet the demands of tomorrow’s customers while maintaining the trust and relationships that have always been the bedrock of financial services.
Listen to the full interview with Dr. Murphy on the Wrestling Payments Podcast: FinTech in Open Water – Seize the Opportunity While Maintaining Control.
Continue the conversation at the 2025 Future of Payments Symposium. View the full agenda.
NEACH - New England Automated Clearing House Association is a neutral, member-focused advocate. Our role is to give you the intelligence, context, and connections you need to make informed strategic decisions. We bring together industry leaders, policymakers, and innovators so you can evaluate innovation through the lens of your institution’s mission and market strategy.
NEACH launched the FinTech Inclusion and Exploration Initiative to help members harness the power of FinTech partnerships. It began with our Payments Program & FinTech Relationship Survey and now continues with the release of our FinTech Shark Week podcast series. We’re keeping the conversation going at our upcoming Future of Payments Symposium.