Which targeted partnerships are worth it for big banks?

The news: While smaller financial institutions (FIs) often partner with third-party organizations like fintechs to offer competitive digital solutions, big banking partnerships typically have a different end goal.

These can include:

Targeting specific audiences: Gen Zers are slowly leaving big banks for their competitors, which has prompted many larger FIs to build customer relationships in new ways.

For example, Capital One has received over 8,000 mentions from 216 YouTube influencers since 2017, per The Financial Brand. Although some of those are likely organic, the bank has officially partnered with influencers in the past—to promote its cafe, for example—per agency Influencer Matchmaker.

Expanding product offerings: Banks have also formed external partnerships to better compete on new or improved products. For example:

• Citigroup and Apollo Global joined forces to offer a $25 billion private credit and direct lending program. This was a response to nonbanks’ domination of the private credit market, as they face fewer regulations in a potentially riskier environment, per Deloitte.
• Goldman Sachs entered the Apple Card partnership to expand its consumer banking services and diversify beyond traditional investment banking. But Goldman may end the contract before its 2030 end date because of disappointing returns, per Reuters.

Technology development: Banks also collaborate with competitors to promote technologies such as generative AI (genAI). 

JPMorgan and Capital One contribute to open-source projects that develop AI and how banks use it. This type of collaboration also helps them attract top talent by offering opportunities to work on cutting-edge projects with real-world applications. 

Banks that actively contribute to open-source projects gain recognition within the tech community as forward-thinking organizations that drive innovation.

Our take: Big and small FIs alike partner with finfluencers and develop a variety of strategic partnerships to promote their brands, enhance customer relationships, and stay competitive in an evolving financial landscape. But big banks primarily leverage partnerships to fuel growth, scale operations, and expand into new markets, while smaller banks use partnerships to stay competitive.

When evaluating partnerships to pursue, larger banks should prioritize those that not only drive expansion and innovation but also create sustainable competitive advantages by integrating new technologies, enhancing customer experiences, and optimizing operational efficiency.

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