By Aymen Daoud – Within the last decade, traditional banks have been increasingly forced out of their comfort zone by fintechs.
These smaller but more agile entities are not afraid to disrupt old models, focusing on delivering frictionless end-to-end customer experiences and making banking more appealing to new generations. For years, it appeared that fintech companies were willing to keep pushing banks in a bid to carve a bigger slice of the financial world for themselves. But things have changed. While traditional banks once clashed with fintechs in a fierce competition for financial services, a new banking model is emerging from the collaboration of these erstwhile rivals.
The pandemic was a turning point for the banking industry, forcing banks to realize the importance of embracing digital transformation. Today, the pressure has moved from delivering digital-first banking experiences, adding the need for a “customer-centric approach” to banking and payments.
This new approach suggests that banking services should be built around the customer’s needs, where an individual customer stands at the centre of the banking universe. This customer-centric approach is made possible by expanding technology to strengthen the relationship between banks and their customers, allowing for a level of connection and attention to individual needs that was not possible in conventional banking.
To achieve this, the level of collaboration between banks and tech companies would need to increase, paving the way for improved end-to-end support services. Such improved customer support includes on-boarding, customer self-serve options, as well as digital lending and investment. If done right, this process could strengthen customer retention and create a closer circle of trust between banks and their customers.
While most traditional banks claim to follow a customer-centric approach, their technical debt shows that a significant part of their budget is spent on placing the product at the core of their efforts rather than the customer. Faced with ever-increasing customer expectations, banks are now trying to close the technology gap between themselves and fintech by co-opting start-ups and employing strategies more typically associated with neobanking.
The benefits of collaboration are not limited to Banks. One of the biggest challenges that fintechs have faced is regulation and compliance. Obtaining an operating license can be costly and time-consuming while not meeting regulations can expose fintechs to heavy fines, as we have seen recently.
Banks have extended experience and resources dealing with the regulatory environment in financial services. Not only that, but by partnering with banks, fintech can tap into an extended customer base and benefit from being associated with trusted financial institutions.
One bank actively embracing ecosystem collaboration is I&M Bank. As part of its strategy, I&M has formed partnerships with fintechs and technology providers to expand financial access and enhance service delivery.
This approach operates on two levels: strengthening corporate ecosystems through existing customer networks and building strategic alliances with fintechs to reach underserved markets. By working with fintech partners, I&M has introduced affordable local currency financing, supporting businesses and individuals without traditional credit access. At the same time, partnerships with technology providers have enabled AI-driven analytics and enhanced cybersecurity measures, improving risk management and digital banking security.
This approach allows I&M to not only broaden its service offering but also to address critical gaps in Kenya’s financial sector. It is perhaps no surprise, then, that I&M Bank has been named Kenya’s favourite bank for two consecutive years.
Historically, the cost and complexity of integrating fintech innovations have posed a barrier to achieving this collaboration. However, as banks shift toward customer-first ecosystems, many are finding that partnerships offer a practical way to expand services and improve accessibility.
I&M Bank exemplifies this approach by embedding financial solutions at the customer’s point of need, ensuring seamless access to services without requiring users to switch platforms. Whether through lending at the point of purchase or real-time account integrations, banks can provide frictionless, context-aware experiences that enhance financial access.
This is where modular platforms play a critical role. Rather than building every capability in-house, banks can integrate fintech innovations on demand, scaling their offerings faster and more cost-effectively.
In moving from rivalry to partnership, the symbiotic relationship between fintechs and banks is fast-forwarding a new era of financial inclusion and customer-centric banking across Africa.
EDITOR’S NOTE: The writer, Aymen Daoud, is the Africa Regional Vice President at Backbase.