To Compete Or To Collaborate: FinTechs And Banks

The relationship between traditional banks and the slate of FinTechs that have arisen over the past decade hasn’t always been one of enthusiastic cooperation. Big banks tended to view FinTechs and their offerings with suspicion — meaning that in the early days, startups often had to beg banks for access to the infrastructure to build it out better. Although it wasn’t easy for either side, the landscape has begun to change, Payoneer’s General Manager Eyal Moldovan told PYMNTS in a recent conversation.

“As FinTechs started to mature and get market share, banks began [the] need to adapt and partner with the FinTechs that had built superior technology, or else they risked losing market share,” Moldovan said.

He added that regulatory changes — particularly things like PSD2 and GDPR — began to really push the pace of open banking worldwide. It also spurred new models of cooperation between banks and FinTechs in areas like investments, acquisitions, co-marketing, white-labeling and embedding solutions, Moldovan said.

Such an expanding and accelerating cooperative landscape pushed Payoneer to recently launch the latest version of Payoneer for Banks, its mass payouts and cross-border payments platform. Moldovan said the new product represents not only a strategic expansion to the company’s offerings, but also the next step in Payoneer’s founding mission — making it easy for firms to push funds whenever and wherever they want to around the globe.

Why Work With Banks?

Payoneer’s platform currently serves millions of small businesses all over the world, plus a few large, well-known players. For example, Airbnb and Google both leverage the platform for their cross-border payment needs.

But Moldovan said the firm decided to extend its offerings and partner with banks for reasons that were “strategic, but also [as] a natural evolution. We don’t believe in building everything ourselves, and we don’t believe that the banks will disappear. Therefore, we shouldn’t replace the last-mile access that banks and eWallets provide, but rather partner with them. And when the banks and eWallets approached us two years ago and asked if we can provide them with a SWIFT alternative solution, we immediately said ‘yes’ and started working on a solution.”

After all, Moldovan noted, the benefit of the collaboration is mutual. Banks and eWallets currently have rather limited options when it comes to cross-border transactions, as they’re reliant on wires that sit under the SWIFT network.

However, in most cases, that’s insufficient for small- and mid-sized transactions that are common to commerce, as it’s slow and inefficient. Moldovan said that the 70 banking partners that Payoneer has signed onto its new service will now have a new option to offer bank customers quick access to their settled funds.

“So, for example, if you are a freelancer in Pakistan, you can immediately withdraw your cross-border earnings for clients or global marketplaces in real-time into your mobile wallet — without ever logging out of your mobile wallet app,” he said.

More broadly, Moldovan noted, Payoneer’s new product offers banks an inducement to sign on new customers, as they can build new offerings and services based on instant seamless access to CX funds that heretofore weren’t possible.

The Ongoing Mobile Revolution 

The global pandemic rather drastically realigned consumer preferences around digital. But the trend lines pushing open banking, FinTech/mainstream bank cooperation and consumer decisions to conduct most of their financial lives using mobile solutions had actually been building for the past two years.

“I think COVID-19 has accelerated what should have already happened anyway,” Moldovan told PYMNTS. “But what we see now is progress at a very, very fast pace.”

And insofar as it’s possible to make forecasts in such deeply uncertain times, he expects to see more — more cooperation between banks and FinTechs, more consumers flocking to digital services and more ways to streamline those services so they’re easier to access in a single point.

“Ultimately, I think that will be good for businesses, and good for banks and FinTechs — and probably most importantly, it will build good offerings for customers,” Moldovan said. “I think the future in that perspective is going to be bright.”