Deutsche Bank Whitepaper: Bank-fintech Alliances to Revolutionise B2B Payments

Banks and fintech’s should collaborate rather than compete, says Deutsche Bank, in its new whitepaper ‘FinTech 2.0: Creating new opportunities through strategic alliance’. The whitepaper explores how fintechs and banks can work together, leveraging their respective strengths to revolutionise the B2B payments space and create sustainable business models in today’s digital era.

As the next stages of digital structural change continue to transform financial services, the focus of technological developments will shift. Most recent developments in business models have been consumer-focused, but the industry is poised on the brink of the first wave of applying such innovation to the B2B space.

Against a challenging backdrop of low risk appetites and numerous regulatory constraints, Deutsche Bank examines the market drivers that should encourage banks and fintechs alike to pursue collaboration over competition, if they are to turn creative concepts into functional solutions and safeguard their ability to continue to innovate.

The whitepaper answers questions such as:

What do end-customer technology ideals look like today, and how do they manifest in the B2B space?

What does the treasury of the future look like?

What factors need to be taken into account when considering a strategic partnership, and what do different partnership models look like?

What constitutes best-practice for bank-fintech alliances?

What can we ultimately expect such partnerships to produce?

Download or View the White Paper

Extracts from the whitepaper:

“For banks, the fintech culture and role as disruptor can be used as an advantage, with fintechs’ position outside of bank walls providing the necessary gateway to innovation. Partnership projects can exploit a “sandbox” approach to experimentation – with the freedom to test new ideas away from banks’ infrastructural and cultural constraints – and can sidestep internal obstacles to innovation, such as over-familiarity with antiquated payment methods, or the parameters imposed by investment or regulatory pressures.”

“Two of the greatest difficulties fintechs face – particularly in the B2B market – are access to a sufficient client base (of corporates and their treasurers) and the ability to successfully scale-up a functioning solution for mass usage. While nimble and innovative, these corporates often lack the necessary global reach, processing infrastructure, financing capabilities and client-knowledge and experience to translate an in-demand market solution into a viable vehicle for long-term growth.”

“The B2B sector holds even greater potential than the retail advances so far, with online sales estimates for B2B revenues in 2020 double those of B2C. Innovation in this sector will be driven largely by CFOs and treasurers, who, accustomed to the prevalence of technology in their personal lives, now expect the same capabilities and level of convenience for their corporate cash management operations.”

“Many existing standardised payment options hail from the 1970s and were primarily designed for payroll. The options … are limited, and can be costly, inefficient or slow. Additionally, they can lack the capacity for data-rich flows in a world where such data is increasingly valuable for providing value-added and targeted client services. These legacy processes need to be updated to systems that drive efficiencies and support the digital age, and it is in this area that fintechs will effect change.”

“Innovation is not simply adapting existing processes or frameworks for app-based use, or use via different channels and devices. It is more dynamic change, such as the technology-enabled introduction of a new business model. Examples are widely apparent outside the financial sector (consider Uber) and usually include payments.” 

Contributors:

Dr. Matthaeus Sielecki, Global Solutions, Working Capital Advisory, TF/CMC

Thomas Frank-Dapp, Deutsche Bank Research

Art Brieske, Global Solutions, TF/CMC

Kevin Garlan, Global Solutions, TF/CMC

Author: Jason Williams

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