Pushed by surging demand for tap-and-go everything, banks are embracing fintech startups as channels to innovation instead of engaging in an all-out war to shut them down. This race for fintech solutions doesn’t stop at specific partnerships; it’s leading to fintech ecosystems.
Why Banks Stopped Treating Fintech as the Enemy
When the first wave of financial technology startups appeared, the obvious reading was that they would pick off the most profitable parts of banking one product at a time: payments, lending, investing, money transfers. Some did exactly that. But startups also had a problem banks could solve. They needed customers, regulatory know-how, access to payment networks and the trust that comes with a familiar name.
Banks, for their part, had the customers and the licences but often struggled to build new digital products quickly. Partnering gave each side what the other lacked. That’s the backdrop to the arrangements below.
A Credit Union in a Coworking Space
Bill Jacobson, CEO and Founder of Workbar, a coworking network across the Greater Boston area, has created a relationship with Digital Credit Union, one of the largest credit unions in the US. They have a space that hosts fintech companies for six months.
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The arrangement is a quid pro quo.
“The [startups] get to work with DCU and see real problems. It’s a great way for them to develop beta customers, accelerate the effort to work on real issues. It gives them space and access to the Digital Credit Union management team as well,” Jacobson says. Meanwhile, Digital Credit Union is “doing this to get closer to startups and new ideas.”
The program kept going after 2016. By 2018 it was operating as the DCU FinTech Innovation Center, fully funded by Digital Federal Credit Union and run by Workbar, and it was admitting seed-stage startups in cohorts, according to a CUInsight release. DCU itself has since grown much larger. It combined with First Tech Federal Credit Union on January 1, 2026, creating a credit union of roughly $28.7 billion in assets and nearly two million members that operates under the First Tech name, First Tech announced.
Google, Apple, Amazon Service
According to PwC’s March 2016 report, Blurred lines: How FinTech is shaping financial services, consumers expect the same service and innovation from banks as they do Google, Apple, and Amazon.
.@Scotiabank‘s @jeffincanada at #BDCfintech: Customers aren’t comparing us to banks. They’re comparing us to their last online experience.
— Tech /NWSRM (@TechNWSRM) April 4, 2016
The fintech division of Toronto’s MaRS Discovery District – a startup incubator – is another example of the cooperation growing between banks and startups.
“There’s not necessarily a threat, or friend-or-foe sort of mentality” among banks sponsoring programs at MaRS, says Adam Nanjee, head of MaRS’s fintech division. “They want to work with the startups.”
Partner or Perish
Financial institutions are wrestling with the competitive implications of fintech. The PwC report says 20% of their business is at risk by 2020, so many are already partnering with more nimble, innovative startups. Funding of fintech startups last year reached $12.2 billion.
Gregory Melchior, a startup co-founder who previously worked at Bank of Montreal and Merrill Lynch, says: “If you’re standalone you’re not going to survive. You need to have a white-labeled solution and work with the banks.”
A white-labelled product is one a startup builds and a bank sells under its own brand. The customer sees their bank’s name and app, while the startup supplies the technology behind it. It’s a less glamorous route than building a consumer brand, but it skips the hardest and most expensive part of fintech: winning customers’ trust with their money.
What Happened Next
The money flowing into fintech grew far beyond the 2015 figure. KPMG’s Pulse of Fintech report found that total global fintech funding across venture capital, private equity and M&A reached US$210 billion across a record 5,684 deals in 2021, up from US$125 billion in 2020, according to KPMG. Payments drew the most money, and KPMG specifically pointed to “buy now, pay later”, embedded banking and open banking as drivers. KPMG’s figures count deals differently from the 2015 number above, so the two aren’t a direct comparison, but the direction is clear.
Open banking is the clearest sign of how the relationship between banks and startups has been formalized. It lets customers tell their bank to share their financial data securely with an approved app, instead of handing over their banking password. In Canada, the first part of the legislation came through the Budget Implementation Act, 2024, and the framework was completed through the Budget Implementation Act, 2025. The new Consumer-Driven Banking Act received royal assent in March 2026 and puts the Bank of Canada in charge of supervising the system, according to the Canada Gazette. The proposed regulations would require large banks to take part, while credit unions, fintechs and others could opt in if they meet accreditation rules.
That’s a long way from a credit union lending desks to a handful of startups, but it rests on the same idea: banks and fintechs each do better when they can work together on agreed terms.
What It Means for Fintech Founders
Melchior’s advice from 2016 has largely held up. The startups that do well in financial services usually find a way to plug into the existing system rather than replace it, whether that’s selling white-label products to banks, joining an incubator a bank sponsors, or building on open banking rules. For founders, the practical questions are who already has the customers you need, and what you can offer them that they can’t easily build themselves.
For more on the fintech threat facing financial institution, read Startups Eat Into the $4.7 Trillion Financial Services Industry.
Frequently Asked Questions
Why are banks partnering with fintech startups?
Consumers expect the same service and innovation from banks as they get from Google, Apple and Amazon. Partnering lets banks reach new ideas quickly, while startups gain customers, expertise and access to bank management.
What was the arrangement between Workbar and Digital Credit Union?
Workbar and Digital Credit Union hosted fintech companies in a space for six months, giving them access to DCU's real problems and management team. By 2018 it was operating as the DCU FinTech Innovation Center, funded by DCU and run by Workbar.
What is a white-labelled fintech product?
It's a product a startup builds and a bank sells under its own brand. The customer sees the bank's name, while the startup supplies the technology behind it.
How much money went into fintech in 2021?
KPMG's Pulse of Fintech found total global fintech funding across VC, private equity and M&A reached US$210 billion across a record 5,684 deals in 2021. That was up from US$125 billion in 2020.
What is Canada's Consumer-Driven Banking Act?
It's Canada's open banking law, which lets people and businesses share their financial data with accredited providers of their choice. The act received royal assent in March 2026 and is supervised by the Bank of Canada.