Banks and financial institutions (FIs) are looking at partnerships differently. The old model, where banks select a single, large vendor to fulfill all non-core requirements, is giving way to a more collaborative approach. Think of it as ‘rise of the ecosystem’ in banking.
Instead of relying on one provider, banks and financial services organizations are increasingly working with multiple experts, each bringing their own proficiency to the table. This shift is not just about cherry-picking the best solutions; it’s about leveraging entire networks of partners that are already integrated and proven to work well together.
Rather than banks painstakingly assembling a patchwork of vendors, ecosystems of trusted partners now present themselves as ready-made solutions, already integrated and tested. This path relieves banks from conducting extensive market searches and complex RFP processes, allowing them to focus on core business objectives, like targeted growth.
This change is not limited to banks. Payment Service Providers (PSPs) and other financial organizations are also adopting an ecosystem mindset. The result is a more dynamic and interconnected financial system, where the boundaries between different players are more porous, and collaboration is prioritized over competition.
Benefits and Challenges of Banking Ecosystems
Adopting an ecosystem strategy brings several benefits, but it also introduces new challenges. One of the most significant advantages is the ability to work with experts who offer plug-and-play solutions. This modularity enables financial institutions to accelerate their speed to market, increase flexibility, and reduce the need for costly customization.
“These things are not science projects anymore,” says Lisa Farmer, Director, Partnerships and Bank Channels at Bottomline. “You’re not waiting for somebody to build a widget for you.” She added that not all ecosystems are alike. There is a risk in adopting unproven solutions, especially from fintechs that may not have a record of successful integration.
Farmer emphasizes the importance of working with established vendors who have already demonstrated their ability to collaborate effectively. “While these ecosystems are great, they need to involve proven, established vendors,” she notes.
The most successful partnerships are those where vendors have already integrated their solutions, supported by case studies and pre-configured propositions.
Another key benefit of the ecosystem model is the shared risk among partners. Delivery of the overall program is no longer the sole responsibility of one vendor; instead, a collaborative team works together to achieve seamless outcomes.
This approach can lead to greater cost efficiency, as banks avoid the pitfalls of excessive customization and the resulting technical debt.
Yet, the collaborative nature of ecosystems also requires a high degree of trust among partners. Vendors must be confident that their collaborators are not competitors, but rather specialists in complementary areas.
“If you get it right, the vendors in the ecosystem are not competitive with one another,” Famer says. “So, you might have one partner for payments, one for security, one for connectivity, and so on. Those are the perfect ecosystems.”
The Critical Role of Integration and Collaboration
For an ecosystem approach to succeed, she says seamless integration and collaboration among partners are essential. It’s not enough to assemble a group of best-in-class solutions; these systems must be able to communicate and work together effectively.
“If each of these systems is not talking to the other, or can’t integrate, or can’t hand off, then it’s pointless. You’ve just got five very separate systems,” Farmer says, highlighting the importance of technical and cultural fit in banking ecosystems.
Responsibility for ensuring integration often falls to a prime vendor, who manages project oversight, technical services, and support. This central role is crucial in preventing fragmentation and certifying that the ecosystem delivers a unified solution to institutions.
“Whoever owns that has overall responsibility. You don’t want five project managers, you don’t want lots of support channels,” she says. “Somebody has to be the prime vendor.” Right up there with precision integration is cultural alignment. The best ecosystems are those where teams understand each other’s challenges and work to solve them together.
This collaborative spirit is what enables ecosystems to deliver real value to banks and FIs.
Strategic Advice for Banks and Financial Institutions
As financial institutions look to accelerate their speed to market and embrace innovation, Farmer offers practical advice. She encourages banks to move away from “monolithic” one-stop-shop solutions and instead seek out proven partners with recognized expertise.
“If an ecosystem is presented and you don’t recognize any of the companies, then that would be a red flag for me,” she advises.
Leveraging existing relationships can be a smart strategy here. Rather than starting from scratch, banks should consult with companies already in their circle of trust, like systems integrators, to see if they can recommend or assemble an ecosystem of reliable vendors.
“Go to your trusted partners. Start there,” she suggests. This approach not only reduces risk but also ensures that the vendors brought to the table are reputable and have a history of successful collaboration.
The trend toward ecosystem partnerships is breaking down old barriers between banks. Increasingly, banks are participating in ecosystems that include other banks, offering services to one another in ways that were previously unthinkable.
Openness is now driven by the need for speed and agility in a highly competitive market, where customers expect rapid innovation and flawless service. When it comes to business payments, Farmer emphasizes the importance of choosing vendors with the right reach and capabilities. While retail customers remain a vital part of the customer mix, banks increasingly prioritize their corporate clients due to their complex needs and significant contribution to overall revenue.
“For business payments, you’ve got to choose vendors with the right level of reach,” Farmer says. Agility, cultural fit, and a willingness to embrace change all matter when working to stay ahead of the curve, she says.
By embracing ecosystem partnerships, banks and FIs can position themselves for greater innovation, efficiency, and resilience. The formula goes something like this: choose partners wisely, prioritize integration and collaboration, and remain open to new ways of working that break down old silos and foster a new collective success.