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Banks and Fintechs: Monetization Strategy and Evolving Business Models

Most conversations around banking and Fintech feature two themes - API monetization and digital innovation. However, that’s where the similarity ends, because the two impact the banking industry in very different ways.

Case in Point 1: ING – Digital Innovation

ING was the first major bank to see a potential alternative business model in the digital banking landscape when they launched ING Direct, way back in 1997. But although they wound down their operations across the United States, Canada and the United Kingdom in 2012 as part of restructuring, they did not give up on the concept and have since innovated in pockets across Europe and Australia to capture market share as a digital-only player. This was because they followed the concept of a model bank[1] across Europe except in Germany, where ING-DiBa was already a key market player with $154 billion in deposits and more than 8 million customers. Also, their recent partnerships with Scalable Capital and Kabbage indicate that partnerships can be scaled from one region to another as long as the fundamental business model is sound. ING’s 115 partnerships with Fintechs in 3 years have won them a marquee client base, bolstered their ability to delight their customers using new age tools for customer engagement and offered some unique investment avenues. This has also been solidified by their commitment to ING Ventures, a EUR 300 million fund that invests in Fintech companies

Case in Point 2: Top banks are investing in niche Fintech – API driven monetization

The key Fintech themes that top U.S. banks have been investing in include: Blockchain, Data Analytics, Insurance, Personal Finance, Wealth Management, Financial Services Software, Lending, Payments, Real Estate, Regulatory Tech and Supply Chain. What’s interesting in this mix is that investments in data analytics, financial services and lending are higher in volume clearly indicating banks’ desire to monetize their investments at the earliest possible instance. Data analytics, financial services and lending are primarily API-driven monetization feeders for banks and are easily related to the business as compared to other novel innovation themes where mainstream adoption is still not in sight.

Case in Point 3: Are marketplaces as important as digital banks?

The key differentiator for challenger banks in recent times is the much-touted ‘marketplace’ that aggregates services for consumers to pick and choose from. Revolut, N26 and Fidor have been early advocates of this and more recently, Starling, Monzo, Atom and Tandem have also adopted it, understanding the value potential of routing a large volume of transactions through their platforms. This brings us to the next question – what do the monetization models for both the parties look like and what kind of profits can they potentially fetch. A classic example here is LendingWorks, a P2P loan provider with a tie-up with Revolut. Since 75% of LendingWorks’s business is driven by its API-driven partner network, it is a clear win-win for all. But not all Fintechs have this kind of business model to succeed in the game. Hence, there is potentially a distinct need for reselling white labeled products / services as well as striking investment level partnerships in the form of joint ventures for this model to sustain itself.

Given these diverse scenarios, banks will have to align their corporate, technology and business strategies to win in the API-driven economy, where partnering with Fintechs is inevitable.


Davis, A. (2018, March 17). Are marketplaces the future of digital banking. AltFi, p. Retrieved from

Economist. (2017, Dec). Dutch, digital and doing nicely. Economist, pp.

ING. (2017). ING-launches-ING-Ventures-a-EUR-300-million-fintech-fund. pp.

ING. (2017). ING-starts-partnership-with-Scalable. pp.

Insights, C. (2018). fintech-investments-top-us-banks. pp.

[1] A model Bank concept is typically employed by banks in smaller markets where it is possible to create a harmonized approach towards product strategy and to offer newer services to customers.

Disclaimer: Views expressed by the author does not necessarily reflect the official policy or position of any other agency, organization, employer or company.

Banks and Fintechs: Monetization Strategy

Comments: (5)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 20 April, 2018, 17:37Be the first to give this comment the thumbs up 0 likes

Since you mention Marketplace - aka Platformification -: 

While Visa is seen as a card network, it could be argued that Visa is also a marketplace. At the highest level is Visa, the marketplace operator. At the next level are Acquirer Banks and Issuer Banks who act as Visa's Agents to onboard Merchants and Consumers respectively. At the last level are Merchants who sell goods / services and Consumers who buy goods / services. Ditto for MasterCard and other leading card networks.

Would you agree?

Sundara Balaji
Sundara Balaji - Infosys | Financial Services - Chennai, India 21 April, 2018, 14:42Be the first to give this comment the thumbs up 0 likes

@Ketharaman: Yes, in the era where the concept of marketplace was not mainstream business, Visa, Mastercard and a few other card networks had all the traffic through them to captialize on, but they were happy to play the 'wait and watch' game to allow newer Fintechs to come in and erode their marketshare. Today, we are in a world, where many new generation consumers do not use a card for any banking transaction and this is bound to resonate across many more markets in the long run.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 23 April, 2018, 18:58Be the first to give this comment the thumbs up 0 likes

@Sundara Balaji:

TY for your reply. Marketplace means Person-to-Business payments. When they launched card payments, V/MC surely had 100% of cashless payment volumes. 50-60 years later, that figure is 90%. What erosion of marketshare are you talking about?

AFAIK, an overwhelming share of non-cash and non-card payments made by new generation consumers is Person-to-Person and does not affect V/MC, whose card payments are for Person-to-Business. As the CEO of MC keeps pointing out, his competitor is cash, not other cashless payment methods.

Sundara Balaji
Sundara Balaji - Infosys | Financial Services - Chennai, India 24 April, 2018, 02:05Be the first to give this comment the thumbs up 0 likes


Respect your POV, but beg to differ on the perception around P2P / P2B if you may categorize them so. The thin line of what defines a marketplace means has been changing so fast that by the time we hit next year, it could be a completely different connotation, from where we started this year.

if cash was indeed the real competition for everyone,then why does a Paypal think of an investment with Acorn while partnering with Visa and Mastercard. (

Also, if Visa and Mastercard were so sure about their business being sound and erosion proof, they would have no need to diversify, partner and invest in upcoming Fintechs as showcased by the many examples below.$17m-from-mastercard,-sequoia-china-and-tencent

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 24 April, 2018, 11:49Be the first to give this comment the thumbs up 0 likes

@Sundara Balaji:

The answer to most of your questions is "Only the paranoid survive". Popularized by Intel's iconic CEO Andy Grove, who wrote an eponymous book, the maxim has become the standard business philosophy of a number of American companies including Microsoft, Oracle, Salesforce, MasterCard, et al. 

Sundara Balaji

Sundara Balaji

Large Deals | Strategic Initiatives

Infosys | Financial Services

Member since

27 Apr 2016


Chennai, India

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