Why Fintech and Financial Services Need Each Other (More Than Either Will Admit).

Published: 2021  |  Perspective updated: 2025

When I was working inside a large financial services organisation, one of the things that genuinely excited me was watching the walls between traditional corporates and fintech firms start to come down. Not just in theory, not just in press releases, but in actual practice: shared forums, shared problems, a growing acknowledgement that neither side had the full picture.

I remember being delighted when we launched an Innovation Forum in partnership with FinTech Scotland and Tata Consultancy Services. At the time it felt like a quiet but meaningful shift — a large, established financial group choosing to look outward, to ask smaller and faster firms what they were seeing, and to bring those perspectives into the work of improving customer outcomes.

That instinct was right. And looking back on it from where I sit now, I think it was also more important than we fully appreciated at the time.

The gap that doesn't go away

The problem in financial services has never really been a lack of good intentions. Most of the people I worked with, and most of the organisations I have worked with since, genuinely want to help their customers. The harder question is whether the products and services being built actually reach people in ways that are useful, accessible, and human.

The numbers suggest there is still a long way to go. The FCA's Financial Lives survey found that 75% of UK consumers aged over 45 have no clear plan for how to take money from their pension, or didn't know they had to make a choice at all. That is not a knowledge problem sitting at the edges of the market. It is a mainstream experience.

A 2024 report by Fair4All Finance found 20.3 million people in the UK now live in financially vulnerable circumstances, up 16% from 17.5 million in 2022. Again, not a niche. Not a fringe group that traditional financial services can design around. Half the population, at some point or another, needs support that the current system was not really built to provide.

This is where fintech has a genuine role to play — not as a disruptor arriving to make incumbents redundant, but as a partner with different capabilities, different speed, and often a very different relationship with the customer.

What large institutions bring — and what they can't always do alone

I spent nearly seven years inside a FTSE 100 financial services group. What large institutions have, and what smaller fintechs often cannot easily replicate, is scale, trust, and regulatory experience. Millions of customers. Deep infrastructure. Relationships with regulators built over decades. When it comes to something as high-stakes as retirement savings, that matters.

What they sometimes lack is the ability to move quickly, to experiment cheaply, to build something small and test whether it works before committing to it. The internal approval processes that protect customers from harm can also slow down the iteration that makes products genuinely better.

Traditional banks forming alliances with fintech startups to enhance their digital capabilities is now a well-established trend — but those collaborations still come with real challenges, particularly around regulatory compliance and data security. Getting this right takes work. It is not a structural fix. It requires sustained commitment from both sides.

What fintech brings — and where it needs grounding

Fintech firms, at their best, are built around a specific customer problem. They tend to be faster, leaner, and more willing to design from the customer's perspective outward rather than from the product inward. As Lloyds Banking Group has noted, the most successful fintechs are mission and purpose led — they exist to do things differently and they can deliver great outcomes for customers and clients.

That is true. But purpose without scale is also a constraint. A fintech can build a beautiful, accessible tool for pension engagement and struggle to reach the people who most need it, simply because they do not have the distribution, the brand recognition, or the regulatory permissions that would let them operate at the scale the problem requires.

The UK's approach to fintech collaboration — through sandbox schemes, open banking frameworks, and accelerator programmes that pair startups with established firms — has made it one of the leading fintech ecosystems in the world. That infrastructure exists for a reason. And organisations willing to genuinely use it, rather than treat it as a PR exercise, are the ones that tend to actually move the needle.

The thing that gets lost in between

In my experience, the biggest risk in corporate-fintech collaboration is not that the two sides cannot work together. It is that the customer gets lost in the middle.

Both organisations are trying to solve a problem. Both have their own timelines, their own internal stakeholders, their own definitions of success. And somewhere in that, the actual human experience — the person trying to understand their pension, or access financial guidance, or make a decision about their money — can stop being the central concern.

This is what I pay most attention to in the consulting work I do now. Not whether the collaboration looks good on paper, but whether it is genuinely oriented around the customer. Are the two organisations building something together that the customer actually needs, in a way that fits how they actually behave? Or are they building something that fits how both organisations prefer to operate?

The distinction sounds obvious. It rarely is in practice.

What I think has changed

When that Innovation Forum launched in 2021, the language around fintech and corporate collaboration was still quite forward-looking. It was aspirational. The idea of these two worlds working closely together was still treated as innovative.

Four years on, that collaboration is table stakes. The UK fintech market is projected to reach £16.9 billion by 2033, driven in large part by partnerships between traditional banks and fintech firms. The question is no longer whether corporates and fintechs should work together. It is whether they are doing it well enough to actually change outcomes for customers — particularly those customers who are furthest from financial confidence and most likely to be left behind by products designed for an easier user.

In December 2024, the UK government announced the development of its first-ever National Financial Inclusion Strategy. That is a signal of how persistent the challenge remains. And it is also a reminder that this work does not belong to government alone. The financial services industry — incumbent and fintech together — has a role in closing those gaps.

The Innovation Forum I was excited about back then was a small thing, really. But the instinct behind it — that the answers to better customer outcomes were unlikely to come from any one organisation working alone — was correct. I still believe that. If anything, I believe it more now.