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How do banks interact with fintech startups?


  • Lars Hornuf

    (University of Bremen
    Max Planck Institute for Innovation and Competition

  • Milan F. Klus

    (University of Münster)

  • Todor S. Lohwasser

    (University of Münster)

  • Armin Schwienbacher

    (SKEMA Business School – Université Côte d’Azur)


The increasing pervasiveness of technology-driven firms that offer financial services has led to growing pressure on traditional banks to modernize their core business activities and services. Many banks tackle the challenges of digitalization by cooperating with startup firms that offer technology-driven financial services and novel service packages (fintechs). In this article, we examine which banks typically collaborate with fintechs, how intensely they do so, and which form of alliance they prefer. Using hand-collected data covering the largest banks from Canada, France, Germany, and the United Kingdom, we provide detailed evidence on the different forms of alliances occurring in practice. We show that banks are significantly more likely to form alliances with fintechs when they pursue a well-defined digital strategy and/or employ a chief digital officer. Moreover, in line with incomplete contract theory, we find that banks more frequently invest in small fintechs but often build product-related collaborations with larger fintechs.

Suggested Citation

  • Lars Hornuf & Milan F. Klus & Todor S. Lohwasser & Armin Schwienbacher, 2021. "How do banks interact with fintech startups?," Small Business Economics, Springer, vol. 57(3), pages 1505-1526, October.
  • Handle: RePEc:kap:sbusec:v:57:y:2021:i:3:d:10.1007_s11187-020-00359-3
    DOI: 10.1007/s11187-020-00359-3

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    More about this item


    Fintech; Strategic alliance; Make; buy; or ally; Entrepreneurial finance; Banks;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship


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