In the future, banks' relationships with big tech will be more important than their fintech partnerships, writes Brian Caplen.

Banks should be collaborating with fintechs not competing with them — that’s the mantra that has been preached by consultants for some time. But do they really need them at all?

The CEO of a small UK bank recently told me that he could download all the software for the apps and APIs he needed to modernise his firm from Silicon Valley suppliers. In a plug-and-play world where tech is easily available, why waste time on bespoke projects with fintechs?

For larger banks that may not do. They will want to differentiate themselves in the market. But news of big banks cutting fintech partnerships at a much faster rate than they are currently signing them suggests we have passed 'peak fintech'.

In fact the unbreakable and interdependent relationship that banks are forging is not with fintechs but with big tech.

Most banks now have a cloud deal with one of the big providers – Google, Amazon, Microsoft – to the point where regulators should be asking much tougher questions about systemic risk. Equally the big tech firms are unlikely to ever want to do balance sheet banking and so will be reliant in offering their services on the banks’ payments rails. If there is a deal to be done between banks and tech companies this one seems the most promising. Brian Caplen is the editor of The Banker. Follow him on Twitter @BrianCaplen

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