Collaboration between Banks and FinTech Companies : An Assessment of Emerging Organizational Designs within

Abstract

By studying how incumbent banks and FinTechs prepare for PSD2 we have assessed what organizational designs that will emerge from collaboration between banks and FinTechs in Norway. We have studied organizational design theory, to discover a collaborative architecture where a closed network of banks, now is opened for third parties such as FinTechs, through open API integrations. Using a qualitative case method, interviewing 11 banks and FinTechs, and using a theoretical background from Organizational Designs, Networks, Ecosystems, Crowdsourcing, Open Sourcing, Collaborative Architecture and Disruptive Innovation we find that banks and FinTech companies are at the learning stages of PS2 integrations through API’s. The organizational designs that emerge will depend on how well the banks will be able to facilitate for open API’s integrations. For the banks the type of organizational design that will emerge will most likely depend who can attract the best and most (FinTechs) to their platform. The platform with the largest network will be the keystone in the ecosystems and will gain the network externalities and distribution power of the end customers. What we are seeing is an organizational architecture that is largely built on the same mechanisms as typical app stores that we have seen emerging in other industries. We also argue that for the open API collaboration to function properly, it would rely on the same mechanisms identified by Fjeldstad et al (2012) where independent actors (FinTech) self-organize; use commons (the banks platform) where the actors share resources, and rely on sets of protocols, processes and infrastructure which enable actors to come together.While the incentives for collaboration for FinTechs to collaborate today with banks are many, the innovation the FinTechs produce is harder to replicate than the banks experience in marketing, compliance and other financial services. However, the network that the banks have is very valuable to the FinTechs, but with the industry opening for other large networks to enter, the banks must prove their position to become the keystone platform.