The symbiotic relationship and collaboration between commercial banks and fintechs in Turkey

Fintech startups have forced traditional banks to change their business models using new IT-enabled technologies. These startups have become a potential threat to the financial industry in recent years. Therefore, traditional banks form strategic alliances with fintech startups to gain a competitive advantage and improve their technological infrastructure. This study examines which form of collaboration banks prefer with fintech firms and in which segment these firms operate. Using a hand-collected dataset, the probit model is applied to analyze 430 bank-fintech alliances in Turkey in 2021. The results indicate that in Turkey, large banks tend to collaborate with fintech startups in a product-related manner rather than investing in them. Large banks prefer to form partnerships with non-payment fintech startups rather than payment service fintechs. Lastly, young fintech startups mainly operate in payment services, and those established in Istanbul are likely to form strategic partnerships with commercial banks in this area.

Abdul Baghi Nabiyev, Gokhan Ovenc