FinTech startups are creating a wide range of solutions for small businesses by targeting the pain points small businesses face in the world of finance, resulting in a direct competition with traditional financial institutions. Now, traditional financial institutions are starting to understand that they need to modernize if they are to keep up. To accomplish this, many traditional financial institutions are choosing to develop partnerships with FinTechs rather than try to compete directly with them.
Such partnerships not only help traditional financial institutions become more relevant in a digital world, they are also providing legitimacy and further funding opportunities for FinTechs. In these partnerships, FinTechs provide technical expertise and business experience while the financial institutions offer deeper capital channels and credibility. This natural partnership aligns the previous competitors to provide the best possible services to underfinanced small businesses across the globe.