When do alliances with FinTechs pay off for banks? The moderating role of corporate governance

This study examines the performance implications of bank-FinTech alliances and the role of corporate governance as a key moderating factor. Based on a hand-collected database of alliances between European banks and FinTech firms from 2012 to 2022, our research shows that corporate governance mechanisms—namely formalizing a bank’s digital strategy, appointing a chief digital officer, and the presence of digital and technological expertise on the board—moderate the relationship between these alliances and bank performance. Our robust findings contribute to the emerging body of research on the banking outcomes of alliances with FinTech firms by introducing the moderating effect of digitalization-related corporate governance mechanisms. Furthermore, the number of alliances and specific FinTech business models influence bank performance when banks have implemented these digital mechanisms. Our findings carry significant implications for banks, policymakers, and regulators, who have increasingly highlighted the vital role governance mechanisms play in fostering successful alliances in recent years.