“For years, I've been repeating the same message to bankers: innovate or die. What started as a provocative warning has become today's banking reality.”

The bank-fintech partnership landscape has moved from theory to survival imperative.At FIBA's May roundtable in Miami, practitioners shared what actually works when modernizing cross-border payments while managing real-world constraints.  

The reality: Non-traditional providers captured up to 65% of international P2P value in some regions in 2024. Meanwhile, correspondent banking relationships declined 20% from 2011-2018. 

Translation: banks are retreating just when customers need more connectivity. The 62% of banks partnering with fintechs on cross-border aren't chasing trends—they're fighting to keep customers.  

Three hard truths emerged

You can outsource platforms, not risk

Regulators are clear: your charter, your accountability. The 40% partnership failure rate stems from alignment problems, not technology. Solution: Pick partners who understand they're part of your control environment, not vendors. 

Stop blaming the core

With 80% of core replacements encountering significant challenges, the smart money builds API layers to connect modern capabilities to stable cores. The API management market heading toward $8-16 billion by 2028 tells you where the industry's going 

Compliance drives competitive advantage

Federal Reserve research shows banks partnering with fintechs extended more credit to underserved consumers without increasing default risk. That's not compliance as cost center — that's compliance as growth engine. Know Your Client's Customer approaches reduce false positives while creating cleaner audit trails. 

The AI reality check AI helps, but governance is table stakes. Use the NIST framework. Build simple control checklists. If vendors can't explain their AI governance, walk away. 

Bottom line Success requires combining banking's trust infrastructure with fintech's speed and innovation. Just 14% of banks generate meaningful revenue from new partnership products, while 37% see operational gains. That gap is your opportunity gain. In cross-border, the bank that can safely serve the most corridors wins. Pick partners wisely, build connective tissue, make compliance your differentiator. 

The reality: innovate or become irrelevant.

Froм Warning to Reality

For years, I've been repeating the same message to bankers: innovate or die. What started as a provocative warning has become today's banking reality. At our FIBA roundtable in Miami, we brought together bankers, fintech leaders, and risk professionals to talk about what modernization really looks like when you still have exams to pass, customers to serve, and budgets to hit. The panelists weren't theorists pontificating about the future of banking; they're practitioners dealing with real customers who expect their money to move as fast as their text messages. Below are the takeaways from that discussion—plain language, practical moves, and a focus on outcomes over buzzwords. 

The Cross-Border Reality Check

Let's be honest about where we are. Many cross-border payments still take days and can cost up to 10x a domestic transfer. That's not just tech—it's structure. Correspondent banking hasn't changed much in decades. 

McKinsey estimates that in 2024, non-traditional providers captured up to 65% of international P2P value in some regions. That's not a rounding error; it's a strategy problem. (McKinsey & Company). Yet the number of active correspondent banking relationships globally declined by 20% between 2011 and 2018. Banks are pulling back from correspondent relationships just when the world needs more connectivity, not less. This creates а massive opportunity for those willing to think differently. 

A recent PYMNTS report (Two-Thirds of Banks Team With FinTechs on Cross-Border Payments) found that 62% of banks are actively working with fintechs on cross-border payments—not because it's trendy, but because they have to. The alternative is watching your customers walk. 

On the policy front, the official sector—G20, central banks, and bodies like the BIS/CPMI and FSB—is pushing hard to make cross-border faster, cheaper, and more transparent by 2027. Those tailwinds will reward banks that modernize the customer front end and the compliance pipeline—not just redraw their corridor maps. (Financial Stability Board, Bank for International Settlements, European Central Bank)  

The playbook is straightforward: pick partners that give you depth in corridors and depth in compliance. Price matters, but predictable settlement, clean data lineage, robust sanctions controls, and exam-ready audit trails are what sustain relationships. Own the customer experience with a simpler front end; rent thespecialized rails where it makes sense.

During our roundtable, we identified three critical areas where bank-fintech partnerships can transform this landscape. But here's the thing—none of this works without facing some hard truths.

Truth 1

You Can Outsource the Platform, Not the Risk

One panelist nailed it: "You can outsource the platform, but not the risk."

U.S. regulators have been crystal clear: you can outsource a capability, not accountability. If your name is on the charter, your name is on the line. The 2023 interagency guidance from the Fed, FDIC, and OCC lays out the life-cycle approach— planning, due diligence, contract structuring, ongoing oversight—that boards and examiners now expect to see. (Federal Reserve, FDIC,OCC.gov) The banks that succeed aren't the ones lookingfor vendors to offload problems onto. They're the ones building genuine strategic alliances. About 40% of bank-fintech partnership[s fail to operationalize, often due to poor alignment around strategy and execution. That's not a fintech problem or a bank problem— it's an alignment problem. What to do next: Use the regulatory framework as your partner selection filter. The best fintechs we see are walking in with clean SOC reports, clear data-ownership terms, response playbooks, and an attitude of "we're part of your control environment," not "we're just a vendor." 

This isn't just regulatory speak—it's the fundamental reality every banker needs to internalize. In 2024, several partner banks reconsidered or exited their partnerships due to regulatory issues. The main reasons ranged from insufficient due diligence and ineffective management of their third-party relationships, to a lack of robust commercial agreements and ongoing oversight.

Truth 2

Stop Blaming the Core. Start Building the Layer That Lets You Move

Core systems do the job they were designed to do. Replacing them wholesale is expensive, risky, and—too often—unsuccessful. Industry estimates suggest that as many as 80% of core banking transformation efforts encounter significant challenges or fall short of initial goals, often resulting in cost overruns or project delays. It's not hard to see why ripping the engine out mid-flight rarely ends well. 

The smarter play is adding an integration layer (APIs and governance) that lets you seamlessly integrate modern capabilities while your core keeps the books

Research projects that the API management market could reach $8 to $16 billion by 2028, as digital connectivity becomes central to modernization strategies. (McKinsey & Company). This isn't theory. Many banks are connecting onboarding, KYC/KYCC checks, fraud tools, cross-border rails, and case management through that layer—so they can swap components without re-wiring the airplane each time. It's faster to market and kinder to your risk appetite. What to do next: Treat APIs like products. Give them owners, SLAs, versioning, and a backlog. Decide what you'll build (customer experience, risk policies) and what you'll buy (specialized rails, analytics).Document the "exit plan" for every partner in case you need to switch. 

If compliance only shows up as "cost center, " you're leaving money on the table.

We heard strong support for shifting from checkbox KYC to transaction-level due diligence —what many call KYCC (Know Your Client's Customer). In higher-risk domains like cross- border, understanding downstream parties and purposes reduces false positives, accelerates decisions, and produces cleaner exam trails. That's a competitive advantage, not a burden. Federal Reserve research from June 2025 found that banks partnering with fintechs extended more credit to underserved consumers without worsening default risk, demonstrating how tech partnerships can drive sound growth. That's the kind of win-win regulators want to see— expanded access without compromising safety and soundness. (Fintech Innovations in Banking Fintech Partnership and Default Rate on Bank Loans) Consider this: compliance advantages aren't just about resilience anymore. They're about speed to market and reputational trust. Compliance technology investment has become a 2025 regulatory trend, with banks that excel here gaining both customer trust and regulatory confidence. This aligns with supervisory expectations that financial institutions cannot dilute standards when third parties are involved—and that risk management must be continuous, data-driven, and documented. When your program can explain "why this transaction is okay" with evidence, not anecdotes, you win with both customers and regulators. (Federal Reserve, FDIC) 

What to do next: Treat compliance as a product pillar. Publish SLAs for onboarding and monitoring.Instrument the process for explainability—what was review what was flagged, and who made the call. Turn procedures into dashboards your teams use.

The Path Forward

Based on our discussion and what I'm seeing in the market, here's what actually seems to work

For Banks

• Stop looking for vendors and start looking for partners. If a fintech doesn't understand your regulatory reality, move on. For Banks For Fintechs  

• Invest in APIs, not moonshots. You need to connect what you have, not replace everything. 

• Make compliance your differentiator. In cross-border, the bank that can safely serve the most corridors wins. 

For Fintechs

• Listen before you pitch. Every banker has heard about your revolutionary platform. What they haven't heard is how you'll help them solve their specific problem. 

• Come prepared with documentation. Security protocols, compliance frameworks, risk assessments—have them ready. 

• Think partnership, not transaction. The days of hit- and-run fintech relationships are over. 

The Bottom Line

I can't conclude without addressing the elephant in the room: AI. Yes, it's already helping us sift alerts, score risk, and flag anomalies. But let's be clear—"AI inside" isn't a free pass. Governance is now table stakes: documented objectives, data controls, human-in-the-loop validation, and independent testing. The NIST AI Risk Management Framework offers a practical roadmap here. For generative AI, NIST's 2024 profile is a helpful companion. (NIST Publications, NIST) 

My advice?

Build a simple AI control checklist—purpose, training data, performance thresholds, drift monitoring, override paths, record-keeping. If your vendor can't answer these questions clearly, that's your answer. 

The future of cross-border payments won't be won by banks or fintechs alone. It'll be won by those who figure out how to combine the trust and infrastructure of traditional banking with the speed and innovation of fintech—and yes, the intelligence of AI, properly governed. The data tells the story: 37% of banks saw significant impact from partnerships on loan productivity, but only 14% saw meaningful revenue from new products. That gap? That's your opportunity. As I told the group in Miami, there's no one-size-fits-all model here.But successful collaboration depends on shared purpose, clear boundaries, and an absolute focus on the end customer. The banks that understand this aren't just surviving—they're positioning themselves to dominate the next decade of international finance. 

The cross-border payments space is ripe for transformation. The technology exists. The demand is clear. The only question is whether traditional banks and innovative fintechs can get out of their own way long enough to seize the opportunity. Remember: in today's world, you either innovate or you become irrelevant. Choose wisely

his article reflects insights from the FIBA roundtable "Beyond Borders: Collaboration Between Banks and Fintechs to Modernize, Comply & Compete, " held May 1, 2025 in Miami, moderated by David Schwartz, with panelists Stephen Coburn (Ionfi/Avalo Labs), Jorge Valle (Banesco USA), Edgar Osuna (Iuvity), and Guillermo Benites (UDT).