At the same time, regulation continues to shape how these partnerships are formed and scaled. As innovation increasingly depends on third-party relationships, policymakers are signaling interest in understanding how these arrangements can support bank health, new institution formation and responsible growth.
Partnerships Move From Strategy to Infrastructure
The PYMNTS Intelligence report “Credit Union Innovation Readiness: How FinTechs Are Shifting Their Partnership Strategies” found that partnerships are now foundational to how FinTechs and financial institutions pursue innovation. FinTechs are actively shifting their partnership strategies toward smaller institutions, particularly credit unions and community banks.
Over the past year, FinTechs became 19% more likely to partner with credit unions, while partnerships with national banks declined. Nearly half of FinTechs that offer end-user products or services now work with credit unions, up from 40% the year before.
Traditional financial institutions are enlisting FinTech partners to deliver capabilities such as real-time transaction management, digital identity tools, rewards programs and artificial intelligence-driven customer support.
Why Small Institutions Are Leaning In
For small banks and credit unions, partnerships are less about experimentation and more about survival. PYMNTS Intelligence revealed that FinTechs serving credit unions are more than twice as likely as others to say their core advantage is helping financial institutions become more competitive.
Even as partnerships grow, compliance remains central. PYMNTS Intelligence data showed that regulatory complexity is still one of the most frequently cited barriers to partnership formation, particularly among FinTechs that do not yet work with credit unions.
The result is a growing emphasis on regulation-ready partnerships, where compliance capabilities are embedded into product design, onboarding and data governance from the outset.
What the New Bill Seeks to Do
That context helps explain the introduction of the Bank-FinTech Partnership Enhancement Act earlier this month. The legislation is a step in further refining and defining regulations. The bill directs the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. to conduct a joint study on how partnerships between banks and FinTechs can support new bank formation, community bank health and innovation.
Reinforcing What the Data Already Shows
For banks and FinTechs, the legislation mirrors and will help shape trends already visible in the data. PYMNTS Intelligence found that partnerships are increasingly central to innovation strategies, especially for institutions that cannot rely on scale alone.
Small banks and credit unions are using partnerships to compete more effectively, while FinTechs are refining their offerings to meet institutional compliance and operational needs.
Rather than creating new mandates, the legislation focuses on understanding outcomes. It calls on regulators to examine whether partnerships reduce time to market, lower compliance burdens, improve technological capabilities and expand access to diverse funding sources. Upon passage of the bill, a report would be due from the regulators that would detail findings that “promote effective partnerships” between these entities.
The bill also asks whether changes to existing laws or regulatory guidance could better support effective partnerships, signaling an interest in alignment rather than restriction.
