Collaboration or Rivalry?

This chapter investigates the relationship between FinTech partnerships and bank efficiency, testing the moderating role of FinTech specialization. The increasing collaboration between traditional banks and FinTech firms has become a strategic response to digital transformation pressures in the financial sector. While prior studies have explored the potential benefits and challenges of bank-FinTech partnerships, empirical evidence on their impact on operational efficiency remains limited and mixed. Collecting a panel dataset of European listed banks over the period 2013–2023, we examine whether FinTech partnerships contribute to lower cost-to-income ratios, a standard proxy for bank efficiency. The analysis is based on a panel fixed-effects model and includes several robustness checks to strengthen our findings. Empirical evidence shows that FinTech partnerships are significantly associated with improved bank efficiency. Findings also show a stronger positive effect when collaborations involve FinTechs specialized in lending or payments. These findings confirm the relevance of strategic alignment and specialization in driving efficiency improvements. The study contributes to the literature by offering new evidence on the role of FinTech partnerships in affecting bank performance and provides implications for banks’ strategic decisions and policy design.