The changing landscape is forcing banks to look at different ways to enhance profitability through the services they offer. From being a one stop shop for all financial service needs, banks are consolidating their profitable ventures and partnering with third parties in areas of non-core competence.  Partnership, by its very nature, allows banks to share risks associated with their unproven capabilities and achieve higher cost efficiencies. In a recent research, when asked how banks saw the potential for partnerships and collaboration with other companies, these were some partnership categories that emerged:

With distributors – here the format is to work with different kinds of distributers like a retail outlet, where resources are combined to create a unique value proposition for the customer. An example was Akbank’s work with Boyer Fashion Stores, where a new card targeting the younger, female audience was instantly issued in the outlet in less than 15 minutes and had some fantastic benefits including a non-stop lottery programme. Some 200,000 cards were issued in the first five months of the launch. 

With companies from other industries – this partnership format is fairly common with banks partnering with the likes of telecom players, utility companies and so on. Barclaycard launched a contactless card with Orange which allowed people to control their accounts by being able to set daily, weekly or even category-based spending.

With technology vendors – rather than developing in-house technology, more and more banks are looking at vendors to develop technology solutions that can help them become more efficient, flexible and adaptable. There have been enough innovations in the field of Internet and mobile where technology vendors have provided solutions that have transformed the way people bank. Earlier branches would have the highest number of transactions but now most progressive banks have moved over 80% of their transactions from branches to other cost-effective channels.

With smaller niche innovative companies – the trend is on the rise where banks form deep relationships with innovative players  for a specific period of time with respect to a key technology. Credit Mutual Arkea’s investement in UpandNet, the online giftcard company is an example that stands out.

With competitors – though this approach is the least adopted, due to regulatory constraints, most smaller banks are aggressive on this front. Bankinter worked with other banks, including key competitors to develop the HalCash remittance product where a customer could send money via SMS and the receiver could withdraw money from an ATM of any other bank without having a card.

I’m sure there are many more models of partnership that banks have adopted, based on local requirements and this trend of partnership is only going to increase as banks aim to become more accessible, affordable, convenient and simple.

It will be interesting get some perspectives on how models of banking partnerships will evolve in the future.