88. As part of this analysis, the EBA has explored how incumbent institutions approach and relate to FinTech, including their interaction with new entrants and other FinTech firms. At this stage, taking into consideration the EBA’s interactions with the industry, as well as the current trends in the market, four different approaches have been identified on how incumbent institutions approach and relate to FinTech. These range from investing directly into new entrant FinTech firms to in-house development of technological solutions.

89. These practices are not mutually exclusive and could be performed in parallel, as it is possible for an institution to be engaging with FinTech in all these different ways. For example, incumbent institutions are leveraging their advantage of large customer bases to launch new innovative propositions through partnerships with new entrant FinTech firms, and in parallel, through their API platforms, they could identify potential investment or partnership targets.

90. In this context, different levels of activity and paces of development in the area of FinTech have been observed across the EU, and thus, in some instances, the engagement with FinTech depends on, or is even restricted by, the speed of FinTech development in the jurisdiction in which firms operate.

4.1 Partnering with new entrant FinTech firms