While fintechs and banks may have once been seen as competitors, their relationship has grown over the years. With market shifts and evolving customer needs, new models of working together have emerged, expanding customers’ options and opening doors for new ways of fintechs and banks to work together in mutually beneficial ways.

A recent PaymentsJournal podcast looked at the state of these partnerships and how they’re driving embedded payments growth. The episode features Bryan Schneider, Product Head for a Fintech Strategy and Partnerships for U.S. Bank who recently helped launch the bank’s Connected Partnership Network, and Albert Bodine, Director of Commercial and Enterprise Payments at Javelin Strategy & Research. They discussed how innovations like open banking have fueled cooperation between banks and fintechs.

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Opening doors through open banking

Historically, banks aimed to serve as a one-stop shop for meeting their customers’ needs by building in-house solutions or partnering with third-parties to white label their solutions. While this approach enables banks to meet many broad customer application needs, it can often cast aside the specific front-office or back-office functionality needed to meet unique industry workflows or use cases. Fintechs have successfully helped fill such voids by creating specific user experiences, workflows and connectivity to address the market needs. In some cases, this has meant even competing with banks by delivering their solution with fully integrated payment capabilities traditionally provided by their bank. But buying behavior has changed, and customers demand more control over choosing their desired banking and technology partners. Gone are the days of either-or, says Schneider. Open banking has opened new doors.

Powered by interoperability and collaboration between banks and fintechs, embedded banking revolves around creating a streamlined process for companies to originate everything in one place versus having to log into multiple systems. It puts the control back in the hands of the customer, and the expertise in the hands of the most capable banking and technology partners.

 “It might seem ideal to be all things to all clients, but the reality is that it’s nearly impossible, as evidenced by the massive ecosystem of general fintech and software solutions in the market,” Schneider said. “They support these different partnership models with more of a plug-and-play experience,