Investing in fintech equity and bank innovation
Investing in fintech equity and bank innovation
We investigate whether equity investing in fintech startups enhances banks’ own innovation and how this relationship varies across domestic and international partnerships. Using a panel of 160 banks and 772 fintech funding rounds from 2005 to 2023, we match Crunchbase deal data with trademarks and patent filings. We find that bank investments in the equity of fintech firms are associated with more bank innovation capabilities. Effects are strongest for domestic investments, consistent with information advantage. The relationship is also stronger when the target firm is fin-native (lending or payments) versus tech-native (data analytics or reg-tech). These findings suggest that strategic equity stakes may serve as a technology-sourcing channel, informing ongoing debates on bank-fintech partnerships and international diffusion of financial technology. Our findings carry significant implications for policymakers, bank executives, and entrepreneurs alike.
Bank innovation, Equity investment, Fintech financing, Strategic alliance
Alfhaili, Faisal Abdulmohsen
c267172f-66e7-47de-989b-eeac3d066e79
Bakoush, Mohamed
09d43d33-abd2-4db0-a26a-2f5831ea0a01
Wolfe, Simon
9a2367fc-36cc-496a-bbd2-e7346bcbb19e
23 February 2026
Alfhaili, Faisal Abdulmohsen
c267172f-66e7-47de-989b-eeac3d066e79
Bakoush, Mohamed
09d43d33-abd2-4db0-a26a-2f5831ea0a01
Wolfe, Simon
9a2367fc-36cc-496a-bbd2-e7346bcbb19e
Alfhaili, Faisal Abdulmohsen, Bakoush, Mohamed and Wolfe, Simon
(2026)
Investing in fintech equity and bank innovation.
Journal of International Financial Markets, Institutions and Money, 108, [102306].
(doi:10.1016/j.intfin.2026.102306).
Abstract
We investigate whether equity investing in fintech startups enhances banks’ own innovation and how this relationship varies across domestic and international partnerships. Using a panel of 160 banks and 772 fintech funding rounds from 2005 to 2023, we match Crunchbase deal data with trademarks and patent filings. We find that bank investments in the equity of fintech firms are associated with more bank innovation capabilities. Effects are strongest for domestic investments, consistent with information advantage. The relationship is also stronger when the target firm is fin-native (lending or payments) versus tech-native (data analytics or reg-tech). These findings suggest that strategic equity stakes may serve as a technology-sourcing channel, informing ongoing debates on bank-fintech partnerships and international diffusion of financial technology. Our findings carry significant implications for policymakers, bank executives, and entrepreneurs alike.
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Accepted/In Press date: 16 February 2026
e-pub ahead of print date: 23 February 2026
Published date: 23 February 2026
Keywords:
Bank innovation, Equity investment, Fintech financing, Strategic alliance
Identifiers
Local EPrints ID: 510325
URI: http://eprints.soton.ac.uk/id/eprint/510325
ISSN: 1042-4431
PURE UUID: fdd305bb-17d8-4dd2-b0f1-0a1c25be61f5
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Date deposited: 25 Mar 2026 18:02
Last modified: 26 Mar 2026 02:59
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Author:
Faisal Abdulmohsen Alfhaili
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