Bank-Fintech Partnerships in the Nordic Region: An Exploratory Study on the Interrelation between Asymmetry in Strategic Alliances and Partner Selection Criteria

Abstract

Driven by increasing digitalisation, changes in regulations as well as soaring competition from both incumbents and newcomers in the financial sector, a growing number of banks have turned to fintechs in order to sustain their competitive advantage and deliver on their innovation agendas. Partnerships between banks and startups have thus been on the rise in recent years, and are expected to shape the future of the financial industry moving forward. By joining forces, in fact, both organisations can leverage their complementarities and create mutual value. Despite their increasing relevance, however, these collaborations still exhibit a high failure rate, and have thus started to attract attention from academics and practitioners alike. By definition, bank-fintech alliances involve organisations presenting dissimilar levels of resources, capabilities, and knowledge, resulting in an asymmetric relationship. According to theory, based on the degree of such asymmetry, imbalances in power and dependence between the two parties can occur. For this reciprocal exchange between partnering firms to be successful, choosing the right ally has been found to be of crucial importance, and a series of screening factors have been suggested by scholars over the years. On these premises, this master’s thesis seeks to examine how banks evaluate partner selection criteria under different asymmetry conditions through a multi-case study strategy. A theoretical framework is constructed by combining the theoretical concepts of asymmetric alliances and partner selection, which create the foundation for the analysis of five bank-fintech alliances across the Nordic region. While it is not possible to conclude that the overall asymmetry level has an impact on the selection criteria, the influence of individual asymmetry factors has been identified. Similarly, a new measure of asymmetry has been brought forward, recognising maturity and its subcomponents as an appropriate differentiating factor. The relevance of multiple criteria at different stages of the partner selection process has also been unveiled. Lastly, the influence of external influences as well as each bank’s priorities has been determined to have an impact on the internal prioritisation of criteria, thus refuting the proposition that an ultimate list of factors exists.