“Fintech” refers to new technology aimed at improving the delivery of financial products or services, either by complementing or competing with those products or services provided by traditional financial institutions (FIs). This broad category results in a wide variety of business models and contracting approaches. Many fintechs contract with existing FIs and, in our experience, this type of contracting can result in mutually beneficial business relationships. It is also our experience that the negotiation phase of the relationships can present real challenges. The good news is that deal friction can be reduced by acknowledging the differing business models and concerns of fintechs and FIs, and by coming well prepared to engage with them.
Commercial contracts
FIs pursue agreements with fintechs for a number of reasons, including accessing novel technology capabilities with a nimble development team, collaborating on new product offerings, and accessing potential new, under-tapped customer demographics.
Because of the wide variety of potential commercial arrangements, there is no single type of agreement that is typical between fintechs and FIs. In our practice, we…
