Fintech Partnerships and Perceived Financial Performance of Commercial Banks Listed on the Nairobi Securities Exchange in Kenya

The banking industry is undergoing rapid transformation as technological advancements, evolving customer expectations, and increasing competition from financial technology (fintech) companies reshape the delivery of financial services. In areas such as digital payments and application programming interfaces (APIs), commercial banks are increasingly collaborating with fintech companies on product development, data analytics, and third-party technology integration. These partnerships enable banks to combine their established regulatory capabilities, customer relationships, and market presence with the technological expertise, flexibility, and innovation capabilities of fintech firms (G​o​m​b​e​r​ ​e​t​ ​a​l​.​,​ ​2​0​1​7; L​e​e​ ​&​a​m​p​;​ ​S​h​i​n​,​ ​2​0​1​8).

Kenya provides an important context for examining these relationships because of its highly developed digital financial-services ecosystem and widespread use of mobile money and digital payments. Kenya’s banking sector has continued to expand collaborations with fintech firms through open banking initiatives, API-enabled services, embedded finance, and digital payment infrastructure. The Central Bank of Kenya (2024) notes that partnerships between commercial banks and technology providers have become an important driver of innovation, customer-centric financial services, and digital transformation in the Kenyan banking sector. The expansion of digital finance has increased interaction between commercial banks and technology-oriented firms. However, the growing presence of fintech partnerships does not necessarily establish that such collaborations translate into improved financial performance. Partnership arrangements may generate benefits through efficiency, innovation, and customer reach, but they may also involve integration costs, cybersecurity risks, regulatory requirements, and coordination challenges.

Fintech adoption, digital transformation, and financial innovation have all received a lot of attention in the literature, but fintech partnerships as a unique organizational strategy have received relatively less attention. Furthermore, the majority of the research that is now accessible comes from industrialized nations and certain Asian markets, which restricts its relevance to African banking contexts. There is still a dearth of institution-level quantitative data that particularly addresses Kenya’s listed commercial banks.

Therefore, the association between fintech partnerships and the financial performance of commercial banks listed on the Nairobi Securities Exchange (NSE) was investigated in this study. Guided by transaction cost economics (TCE), the study focused on whether collaboration with fintech firms enables banks to access complementary technological capabilities, reduce innovation and coordination costs, and improve financial outcomes.

TCE, principally associated with Williamson (2007), explains how organizations select governance arrangements that minimize the costs of undertaking economic activities. The theory proposes that firms do not necessarily perform all activities internally. Instead, they compare the costs of internal development with the costs associated with acquiring, coordinating, or governing resources through external arrangements. Transaction costs arise from factors including uncertainty, asset specificity, bounded rationality, and the possibility of opportunistic behavior.

TCE provides a useful theoretical basis for understanding fintech partnerships because digital innovation in banking often requires specialized technological expertise, substantial investment, and rapid adaptation to changing technologies and customer expectations. Developing every technological capability internally may therefore be costly and time-consuming. Partnerships with fintech firms provide an alternative governance arrangement through which banks can access specialized technologies and capabilities without bearing the full cost of internal development.

In the banking context, fintech partnerships can reduce transaction and coordination costs by allowing institutions to obtain specialized technological solutions, integrate external expertise and accelerate digital product development. Collaboration may also enable banks to share technological risks and concentrate internal resources on core activities such as financial intermediation, regulatory compliance and customer relationship management. The theory further suggests that external collaboration becomes particularly valuable under conditions of uncertainty, where flexibility and rapid access to specialized capabilities are important.

The relevance of TCE to this study therefore lies in its explanation of why commercial banks may choose collaboration rather than complete internal development of digital capabilities. Where fintech partnerships reduce innovation, coordination, and service-delivery costs while improving organizational flexibility, they may contribute to stronger financial performance. TCE consequently provides the theoretical basis for expecting a positive relationship between fintech partnerships and the financial performance of listed commercial banks in Kenya.

Fintech partnerships have become an increasingly important component of banking-sector transformation. Rather than developing all technological capabilities internally, banks can collaborate with fintech firms to access specialized technologies, innovative business models, and digital delivery capabilities. Such collaboration can potentially enhance financial performance through operational efficiency, product innovation, customer reach, and new revenue opportunities.

The relationship can partly be explained by the complementary resources possessed by banks and fintech firms. Commercial banks generally possess established customer relationships, financial resources, regulatory knowledge, institutional infrastructure, and market legitimacy. Fintech firms, by contrast, often provide technological expertise, innovative capabilities and flexibility in developing digital solutions. Partnerships allow these complementary capabilities to be combined, potentially enabling banks to respond to technological change more quickly and at lower cost than would be possible through entirely internal development.

Operational efficiency represents one potential pathway through which partnerships may affect financial performance. Integration of external technologies can automate processes, reduce manual intervention, and improve transaction processing. Digital payment partnerships and third-party technology integration may therefore enable banks to improve service delivery while reducing some costs associated with developing and maintaining technological capabilities internally. P​h​i​l​i​p​p​o​n​ ​(​2​0​1​6​) argues that financial technology has the potential to improve the efficiency of financial intermediation, while Nicoletti (2017) highlights its contribution to process efficiency and strategic flexibility. Similarly, K​h​a​n​ ​e​t​ ​a​l​.​ ​(​2​0​2​4​) argue that fintech integration enhances operational efficiency, digital service delivery, and institutional performance, particularly within banking institutions in developing economies.

Fintech partnerships may also support product and service innovation. Collaboration can provide banks with access to expertise in digital payments, data analytics, artificial intelligence, cybersecurity, digital lending and customer-interface technologies. These capabilities can shorten product-development cycles and enable banks to respond more rapidly to changing customer preferences. G​o​m​b​e​r​ ​e​t​ ​a​l​.​ ​(​2​0​1​7​) characterize fintech as a transformation of financial services involving new technologies, business models and institutional arrangements. Similarly, L​e​e​ ​&​a​m​p​;​ ​S​h​i​n​ ​(​2​0​1​8​) conceptualize fintech as an ecosystem involving financial institutions, technology firms, customers and other stakeholders. These perspectives suggest that value creation in digital finance may depend not only on technology adoption but also on relationships among ecosystem participants.

This distinction between fintech adoption and fintech partnerships is important. Technology adoption concerns an organization’s use of a technological solution, whereas a partnership involves an inter-organizational relationship through which resources, knowledge, technology, and capabilities are combined. A bank may adopt technology independently without forming a relationship with a fintech firm. A partnership, however, may provide access to specialized capabilities that would otherwise require substantial internal investment. From a TCE perspective, such collaboration may be advantageous when external access to capabilities is more efficient than internal development. Recent evidence also highlights the growing role of open finance in strengthening collaboration between banks and fintech firms. CGAP et al. (2024) argue that standardized APIs and secure data-sharing frameworks improve interoperability, accelerate innovation, and enhance customer experience by enabling financial institutions to collaborate more efficiently with third-party technology providers.

Fintech collaboration may further affect performance through customer reach and financial inclusion. Similarly, the World Bank (2024) observes that digital financial partnerships expand access to financial services by improving payment interoperability, supporting innovative credit and savings products, and increasing the accessibility of digital banking services. These outcomes reinforce the potential contribution of fintech partnerships to organizational performance and financial inclusion. Digital platforms and integrated payment technologies can allow banks to serve customers through channels that are more accessible than traditional branch-based services. Increased accessibility may expand customer reach, increase transaction activity, and create opportunities for cross-selling financial products. Care et al. (2025) emphasize the contribution of financial technologies to financial inclusion, improved access to financial services, and broader sustainable development outcomes. However, greater access does not automatically imply higher profitability because digital expansion may also require investment in technology, cybersecurity, risk management, and regulatory compliance.

The empirical literature generally indicates positive relationships between fintech-related innovation and banking outcomes, although the evidence is not uniform. G​o​m​b​e​r​ ​e​t​ ​a​l​.​ ​(​2​0​1​7​) demonstrate the broader transformation of financial services associated with fintech, while L​e​e​ ​&​a​m​p​;​ ​S​h​i​n​ ​(​2​0​1​8​) emphasize the importance of ecosystem relationships and complementary capabilities. Wang et al. (2024) provide empirical evidence that fintech adoption contributes to improved bank performance by enhancing operational capabilities and supporting digital transformation. These findings support the expectation that fintech-related capabilities can contribute to organizational performance, but they do not necessarily establish the independent relationship of partnerships between established banks and fintech firms.

More recent research increasingly emphasizes collaboration rather than viewing fintech firms solely as competitors or disruptors. C​o​s​t​a​ ​e​t​ ​a​l​.​ ​(​2​0​2​5​) identify bank-fintech cooperation as an important strategic response to technological disruption because the two parties possess complementary capabilities. X​u​ ​e​t​ ​a​l​.​ ​(​2​0​2​5​) similarly identify operational efficiency, financial resilience, innovation capability, and digital transformation as dominant themes in the literature on fintech and bank performance. R​i​o​s​-​V​a​z​q​u​e​z​ ​&​a​m​p​;​ ​P​o​r​t​e​l​a​-​M​a​s​e​d​a​ ​(​2​0​2​6​) further indicate that research on fintech and banking is expanding, while evidence remains uneven across geographical and institutional contexts.

However, partnerships may also create costs and risks. Integration of external technologies may require investment in systems, cybersecurity, employee capabilities and governance. Banks may also experience interoperability challenges, dependence on third-party providers, data-security concerns and coordination difficulties. The benefits of partnerships may therefore depend on the ability of banks to manage these risks and convert technological capabilities into commercially valuable services. This reinforces the need for empirical investigation rather than assuming that all fintech partnerships automatically improve financial performance.

The geographical distribution of existing evidence presents an additional limitation. A substantial proportion of fintech research has emerged from Europe, North America, and selected Asian economies. Although these studies provide important theoretical and empirical insights, their findings cannot automatically be generalized to African banking systems because institutional environments differ in financial infrastructure, regulation, digital adoption, financial inclusion, and customer behavior.

Kenya provides a particularly relevant setting because of its established digital-finance ecosystem, widespread mobile-money usage, and extensive interaction between financial institutions and technology-oriented firms. Commercial banks increasingly engage fintech firms through payment systems, technological integration, product development, and other digital services. Yet institution-level evidence on whether these partnerships translate into measurable financial-performance outcomes remains limited.

Overall, Kenyan data show a positive correlation between digital finance and performance in the banking sector. According to Muthaura et al. (2021), fintech exerted a significant effect on NSE-listed banks, while Muttai et al. (2023) concluded that mobile banking, internet banking, agency banking and ATMs had an impact on the performance of banks in the financial sector. Online banking, agency banking, and mobile banking also had positive impacts, as found by Gaya et al. (2023). Small-scale studies reinforce the above finding of a positive relationship between fintech and performance, but largely focus on technologies.

More directly, A​c​h​i​e​n​g​ ​&​a​m​p​;​ ​K​a​b​i​s​a​n​i​ ​(​2​0​2​5​) revealed that digital strategic partnerships are significantly positively linked to the financial performance of commercial banks in Kenya, including fintech companies among strategic partners. Also, Njeru (2024) concluded that integration of fintech has a significant impact on banks’ return on assets (ROA) via mobile banking. These results suggest that although these findings support the result of the current study, they are still limited in regard to partnership-specific mechanisms instead of technology implementation. Hence, the purpose of the study is to investigate fintech partnerships and the financial performance of the banks listed on the NSE.

Three related gaps emerge from the literature. First, existing evidence is geographically concentrated outside Africa, limiting understanding of bank-fintech relationships in African emerging markets. Second, many studies examine fintech adoption, digital transformation, or financial innovation broadly rather than isolating fintech partnerships as a distinct organizational strategy. Third, existing research includes a substantial proportion of reviews, conceptual studies, qualitative analyses, and cross-country investigations, with comparatively limited quantitative evidence from individual institutional settings.

The study on fintech collaborations amongst commercial banks registered on the NSE, the current study fills in these gaps. It uses primary data obtained from managers with knowledge of digital transformation, information technology, strategy, and operations and quantitatively examines the relationship between fintech partnerships and financial performance. By focusing on a single emerging-market banking environment, the study provides context-specific evidence on whether inter-organizational fintech collaboration is associated with financial performance. Guided by TCE, it further contributes by linking the strategic decision to collaborate with the financial-performance implications of accessing external technological capabilities.

Overall, the literature provides a theoretical basis for expecting fintech partnerships to improve financial performance through lower innovation and coordination costs, greater operational efficiency, faster innovation, and improved customer reach. Nevertheless, the limited institution-level evidence from Kenya means that the strength and significance of this relationship cannot be assumed. Therefore, this study investigates whether fintech partnerships have a major impact on the financial performance of commercial banks that are listed on the NSE.

The study was guided by TCEs and conceptualized fintech partnerships as the independent variable and financial performance as the dependent variable. Fintech partnerships were operationalized through three dimensions: API integration, digital payment partnerships, and collaborative product innovation. Financial performance was assessed through perceived profitability outcomes reflected in ROA and return on equity (ROE).

The framework proposes that stronger fintech partnerships enable commercial banks to access complementary technological capabilities, improve operational efficiency, reduce the costs associated with internal technological development, accelerate product innovation, and enhance service delivery. These mechanisms are expected to contribute to improved financial performance.

As illustrated in Figure 1, fintech partnerships constitute the independent variable, while perceived financial performance represents the dependent variable.

Therefore, the framework makes the assumption that financial performance among commercial banks listed on the NSE is positively correlated with the degree of fintech partnerships.

TCE suggests that organizations select governance arrangements that minimize the costs of acquiring, coordinating, and developing resources (Williamson, 2007). In banking, fintech partnerships provide an alternative to developing all digital capabilities internally. Through collaboration, banks can obtain specialized technological expertise, integrate digital payment solutions, accelerate product development, and access third-party technological capabilities without bearing the full cost of internal development.

Fintech partnerships may consequently improve financial performance through operational efficiency, faster innovation, improved customer service, and expanded digital reach. Existing literature supports the broader expectation that fintech-related innovation and collaboration can contribute to efficiency, competitiveness and improved banking outcomes (C​o​s​t​a​ ​e​t​ ​a​l​.​,​ ​2​0​2​5; G​o​m​b​e​r​ ​e​t​ ​a​l​.​,​ ​2​0​1​7; L​e​e​ ​&​a​m​p​;​ ​S​h​i​n​,​ ​2​0​1​8; P​h​i​l​i​p​p​o​n​,​ ​2​0​1​6; Wang et al., 2024).

However, the existence of a partnership does not necessarily guarantee improved financial outcomes. The benefits depend on the effectiveness of integration, coordination, governance, cybersecurity, and regulatory compliance. The empirical relationship therefore requires direct examination within the Kenyan banking context.

Based on TCE and the empirical evidence reviewed, the study tested the following hypothesis:

H₁: Fintech partnerships have a statistically significant positive association with perceived financial performance of commercial banks listed on the Nairobi Securities Exchange in Kenya.

The research philosophy used in the study was positivist. This strategy was acceptable because the study used quantifiable dimensions and statistical analysis to objectively investigate the relationship between fintech partnerships and financial performance. The study was able to develop a testable hypothesis and use empirical data to examine the relationship between the study variables thanks to the positivist methodology.

The study aimed to ascertain if fintech partnerships significantly predicted financial performance among commercial banks listed on the NSE; an explanatory research method was used. Examining the direction, magnitude, and statistical significance of the relationship between the independent and dependent variables was made possible by the design.

The eleven commercial banks that were listed on the NSE made up the target population. The listed banks were selected because they constitute an identifiable segment of Kenya’s formal banking sector and operate within an environment characterized by extensive digital transformation and fintech engagement.

The unit of analysis was the listed commercial bank, while the unit of observation was the individual managerial respondent. Respondents were selected from managerial functions with direct knowledge of digital transformation, information technology, strategy, operations, innovation, and digital banking activities.

To find respondents with pertinent expertise, purposive sampling was utilized to provide informed assessments of fintech partnerships and financial performance within their respective institutions. A total of 110 questionnaires were distributed across the eleven listed commercial banks. As indicated in Table 1, 84 valid questionnaires were received and incorporated into the analysis, yielding a response rate of 76.4%.

A structured questionnaire with closed-ended statements scored on a five-point Likert scale from 1 (strongly disagree) to 5 (strongly agree) was used to gather primary data. The purpose of the questionnaire was to obtain standardized responses concerning the extent of fintech partnerships and perceived financial performance.

The respondents were selected based on their managerial responsibilities and knowledge of digital transformation, fintech collaboration, banking operations, and strategic decision-making. Their positions enabled them to provide informed assessments of their institutions’ fintech partnership activities and perceived financial performance.

After receiving the required institutional and ethical approval, data collecting was started. Respondents were made aware of the goal and nature of the study, and participation was entirely voluntary.

Fintech partnerships constituted the independent variable. The construct was measured using three structured questionnaire items administered to managers of participating commercial banks. The items assessed the extent to which the respective banks engaged in strategic collaboration with fintech firms to support digital banking activities, technological capabilities, and service delivery.

A five-point Likert scale, with 1 denoting strongly disagree and 5 denoting strongly agree, was used to gauge responses. Higher scores indicated a higher reported level of fintech partnership activity. The three categories were combined to create a composite measure of fintech partnerships.

Cronbach’s alpha was used to evaluate the construct’s internal consistency. Fintech partnerships had acceptable internal consistency with a Cronbach’s alpha coefficient of 0.878, which is higher than the suggested criterion of 0.70.

Financial performance constituted the dependent variable. It was measured using three structured questionnaire items designed to capture respondents’ assessments of their individual commercial banks’ financial results. Profitability outcomes, such as perceived ROE and ROA, were the main emphasis of the measurement.

A five-point Likert scale, with 1 denoting strongly disagree and 5 denoting strongly agree, was used to measure the items. A composite measure of perceived financial performance was created by combining the responses; higher scores indicated better perceived financial performance.

The financial performance construct recorded a Cronbach’s alpha coefficient of 0.889, indicating satisfactory internal consistency. Importantly, ROA and ROE in this study were based on managerial perceptions reported through the questionnaire and were not independently calculated or verified using audited financial statements. Therefore, rather than being independently confirmed accounting ratios, the results should be viewed as indicating perceived financial performance.

The validity and reliability of the research instrument were assessed before the main data collection. The assessment involved expert review and pilot testing, followed by internal consistency analysis.

A pilot study was conducted using 11 respondents drawn from managerial and professional functions relevant to digital banking, including information technology, digital banking, strategy and operations. The pilot respondents were excluded from the main study. The pilot exercise assessed the clarity, relevance, sequencing and adequacy of the questionnaire items, and the feedback informed minor revisions to the instrument.

Content and face validity were enhanced through review of the questionnaire by the research supervisor and a subject-matter expert with knowledge of digital banking and financial services. The review considered the relevance and clarity of the items and their alignment with the study objectives, conceptual framework, and operational definitions.

Cronbach’s alpha was used to evaluate reliability. For internal consistency, a coefficient of 0.70 or higher was deemed appropriate. The fintech partnerships construct recorded an alpha of 0.878, while financial performance recorded an alpha of 0.889. Both values exceeded the accepted threshold and indicated satisfactory internal consistency.

The Statistical Package for the Social Sciences (SPSS) was used to code and analyze the gathered data. The study variables were summarized using descriptive statistics. The direction and intensity of the association between fintech collaborations and financial performance were determined using Pearson’s product-moment correlation analysis.
To find out if fintech collaborations significantly predicted financial performance, simple linear regression analysis was then used. The regression model’s specifications were:

FP = β₀ + β₁FIP + ε

where,

FP = financial performance;

β₀ = regression constant;

β₁ = regression coefficient for fintech partnerships;

FIP = fintech partnerships; and

ε = error term.

Statistical significance was assessed at the 5 percent significance level.

Regression diagnostic tests were used to see whether the data met the requirements for Pearson correlation and simple linear regression. The assessment considered normality, linearity, homoscedasticity and independence of errors.

Normality was assessed to determine whether the distribution of the relevant variables was sufficiently suitable for parametric analysis. Linearity was assessed to establish whether a linear relationship existed between fintech partnerships and financial performance. To ascertain if the variance of residuals was comparatively stable among expected values, homoscedasticity was investigated, while independence of errors was assessed to establish whether regression residuals were independent.

The diagnostic assessment indicated that the assumptions required for the regression analysis were adequately satisfied. Since the model contained one independent variable, multicollinearity testing was not applicable.

Before data collection, ethical approval was acquired from the appropriate institutional research ethics structures. Additionally, permission from the collaborating commercial banks was requested. Participation was entirely voluntary, and respondents were made aware of the nature and goal of the study.

Anonymity and confidentiality were upheld during the whole research process. The results were reported without disclosing any personally identifiable information. The data were managed in compliance with applicable research ethical regulations and used exclusively for academic and research purposes.

Managers of the eleven commercial banks listed on the NSE received a total of 110 questionnaires. A response rate of 76.4% was obtained from the 84 valid surveys that were returned and included in the research. The response rate was considered adequate for the analysis and provided sufficient observations for the statistical procedures undertaken.

The study variables were summarized using descriptive statistics. Three questionnaire items on a five-point Likert scale were used to measure fintech relationships; higher scores denoted a higher level of fintech partnership activity. The findings show that there is a lot of fintech cooperation activity among the participating commercial banks, with a mean score of 4.61. The descriptive statistics for fintech partnerships are presented in Table 2.

The relatively high mean reported for fintech partnerships indicates that respondents generally agreed that their institutions engaged substantially in fintech-related partnerships.

Fintech relationships and financial performance were examined using Pearson’s product-moment correlation analysis. Table 3 displays the findings.

Fintech partnerships and financial performance have a positive Pearson correlation coefficient of r = 0.820, according to Table 3’s results. This suggests that the two variables have a significant positive linear relationship. According to a two-tailed test, the connection was statistically significant at the 1% level (p < 0.01). Therefore, among the respondents, higher stated levels of financial performance were linked to higher reported levels of fintech relationships.

The extent to which fintech partnerships predicted perceived financial performance was assessed using simple linear regression analysis. Table 4 presents the model summary.

The results indicate a strong positive relationship between fintech partnerships and perceived financial performance, with an R value of 0.820. The coefficient of determination (R² = 0.672) indicates that fintech partnerships explained 67.2% of the variation in perceived financial performance. The remaining 32.8% may be attributable to other factors not included in the model and random variation. The adjusted R² of 0.668 indicates that the model retained substantial explanatory power after adjustment for the number of predictors. The standard error of the estimate was 0.312.

The statistical significance of the regression model was assessed using analysis of variance (ANOVA). The results are presented in Table 5.

The ANOVA results indicate that the regression model was statistically significant, F(1, 82) = 168.31, p < 0.001. This indicates that fintech partnerships significantly predicted perceived financial performance among commercial banks listed on the Nairobi Securities Exchange in Kenya.

The study hypothesized that fintech partnerships have a statistically significant positive association with perceived financial performance.

H₁: Fintech partnerships have a statistically significant positive association with the perceived financial performance of commercial banks listed on the Nairobi Securities Exchange in Kenya.

Given the statistically significant positive relationship between fintech partnerships and perceived financial performance (r = 0.820, p < 0.001), together with the statistically significant regression model, the null hypothesis was rejected in favour of the alternative hypothesis.

The regression coefficient was examined to determine the direction and statistical significance of the relationship between fintech partnerships and perceived financial performance. Because the study employed simple linear regression with one independent variable, the standardized regression coefficient corresponds to the Pearson correlation coefficient. The results are presented in Table 6.

The results demonstrate a strong positive and statistically significant association between fintech partnerships and perceived financial performance (β = 0.820, t = 12.97, p < 0.001). The standardized coefficient indicates that higher levels of fintech partnerships were associated with higher perceived financial performance. These findings provide evidence of a significant positive relationship between fintech partnerships and the perceived financial performance of commercial banks listed on the Nairobi Securities Exchange in Kenya.

The results show that among commercial banks listed on the NSE, there is a perceived substantial and statistically significant positive correlation between fintech partnerships and financial performance. Fintech relationships strongly predicted financial performance, according to the regression analysis (F(1,82) = 168.31, p < 0.001), while the correlation analysis yielded a Pearson correlation coefficient of r = 0.820 (p < 0.01). Fintech collaborations explained 67.2% of the observed variation in financial performance, according to the model’s R² of 0.672. These findings imply that among the participating listed commercial banks, perceived financial performance is significantly influenced by fintech agreements.

The strong positive relationship may be explained by the complementary capabilities available through bank-fintech collaboration. Commercial banks possess established customer bases, financial infrastructure, regulatory experience, and institutional resources, while fintech firms provide specialized technological capabilities, digital solutions, and innovation capacity. Combining these capabilities can enable banks to introduce and improve digital services without developing all technological capabilities internally. Such collaboration can facilitate faster product development, improve service delivery and support operational efficiency. The magnitude of the relationship observed in this study is therefore consistent with the view that collaboration with specialized technology providers can contribute to improved organizational outcomes.

The findings are consistent with the broader fintech literature. P​h​i​l​i​p​p​o​n​ ​(​2​0​1​6​) argues that financial technology can improve the efficiency of financial intermediation, while G​o​m​b​e​r​ ​e​t​ ​a​l​.​ ​(​2​0​1​7​) describe fintech as a transformation of financial services involving new technologies, business models and institutional arrangements. Similarly, L​e​e​ ​&​a​m​p​;​ ​S​h​i​n​ ​(​2​0​1​8​) emphasize the importance of ecosystem relationships and complementary capabilities in the development of fintech services. The positive association identified in the present study is therefore consistent with previous research suggesting that technological capabilities and inter-organizational collaboration can support improved banking outcomes.

The findings also correspond with more recent research on bank-fintech relationships. C​o​s​t​a​ ​e​t​ ​a​l​.​ ​(​2​0​2​5​) identify cooperation between banks and fintech firms as an important strategic response to technological disruption because the two groups possess complementary capabilities. Wang et al. (2024) similarly report evidence of a positive relationship between fintech adoption and bank performance, highlighting the role of digital technologies in improving banking outcomes. The present findings extend these observations by providing institution-level quantitative evidence from commercial banks listed on the NSE and by examining fintech partnerships specifically rather than fintech adoption or digital transformation in general.

The findings can be further explained through TCE. Williamson (2007) argues that organizations select governance arrangements based partly on the costs associated with acquiring, coordinating, and developing resources. From this perspective, fintech partnerships provide banks with an alternative to developing every technological capability internally. By accessing specialized technology and expertise through external collaboration, banks may reduce some of the costs and time associated with internal technological development. The strong positive relationship observed in this study is therefore consistent with the TCE proposition that external governance arrangements can be beneficial where they provide access to specialized resources more efficiently than internal development.

The findings make a theoretical contribution by providing empirical support for the application of TCE to bank-fintech relationships. While TCE has traditionally been concerned with explaining decisions concerning markets, firms and alternative governance arrangements, the findings demonstrate its relevance to contemporary technology-enabled financial services. Fintech partnerships can be understood as a governance mechanism through which banks obtain specialized technological capabilities while managing the costs associated with internal development. The results therefore extend the application of TCE to an emerging form of inter-organizational collaboration within the Kenyan banking sector.

The findings also have practical implications for bank management. The strong association between fintech partnerships and financial performance suggests that managers may benefit from treating fintech collaboration as a strategic component of digital transformation rather than merely as a technology procurement activity. Banks can strengthen partnerships in areas such as APIs, digital payments, collaborative product development and third-party technology integration. However, such partnerships should be supported by appropriate governance structures, clearly defined responsibilities, cybersecurity controls, regulatory compliance mechanisms and continuous performance monitoring. These findings are also consistent with recent regulatory guidance on digital finance governance. The Basel Committee on Banking Supervision (2024) recommends that banks strengthen oversight of fintech partnerships through robust cybersecurity controls, third-party risk management frameworks, operational resilience measures, and continuous monitoring of outsourced digital services. Effective governance therefore complements strategic collaboration in realizing the benefits of fintech partnerships.

The findings further have implications for fintech firms and policymakers. Fintech firms can strengthen their value proposition by developing solutions that complement existing banking infrastructure and address specific operational and customer needs. The results show that among commercial banks listed on the NSE, there is a perceived substantial and statistically significant positive correlation between fintech partnerships and financial performance. Appropriate regulatory and governance frameworks can facilitate innovation while addressing risks associated with third-party technology providers and digital financial services.

Overall, the findings demonstrate that fintech partnerships are significantly associated with financial performance among commercial banks listed on the NSE. The results support the proposition that inter-organizational collaboration can provide access to complementary technological capabilities and contribute to improved organizational outcomes. They also provide empirical support for TCE as a useful framework for explaining why banks may engage fintech firms as an alternative to developing all technological capabilities internally.

The study aimed at investigating the correlation between fintech partnerships and perceived financial performance of commercial banks of the NSE in Kenya. The study is important as fintech partnerships are an emerging and important aspect of the transformation of banking services, and there is limited quantified evidence of the relationship between fintech partnerships and perceived financial performance at the institution level in the Kenyan context.

Results showed that there was a strong relationship between fintech partnerships and perceived financial performance, and this relationship is statistically significant. Pearson correlation analysis yielded r = 0.820 with a level of significance of p < 0.01. Simple linear regression results also demonstrated that the fintech partnership was a significant predictor of the perceived financial performance with F(1, 82) = 168.31, p < 0.001, R² = 0.672. This suggests that 67.2% of the changes in the managers’ perceptions of financial performance (measured in terms of their perceptions of ROA and ROE) were attributable to fintech partnerships.

The theoretical and practical implications of the findings are discussed. The findings offer empirical evidence and contribute to the theoretical understanding of how TCE can be applied to the relationship between banks and fintech companies. As a way of not building all of the banks’ digital capabilities in-house, technological capabilities and expertise can be accessed via fintech partnerships. From a practical perspective, the study indicates that bank executives, including bank managers, might consider fintech partnerships as one of the strategic aspects of the journey toward digital transformation, not just in digital payments, but in combined product development and API partnerships. Proper management, cybersecurity, performance monitoring, and regulatory compliance processes should be established as a support measure for such a partnership.

The results underscore the need for financial technologies to provide products or services that are complementary to banking services and meet particular needs of banking institutions and their customers. The results highlight for regulators and policymakers the important need to have an enabling environment to support bank-fintech collaboration while keeping proper protections in place for data security, consumer protection, and financial-sector stability.

However, the result must be interpreted in view of the measurement approach taken in the study. Perceived financial performance was based on managers’ perception of ROA, ROE, and not on the actual figures from audited financial statements. In view of this, the results show that there is a significant association between fintech partnerships and the managers’ assessment of financial performance and that this should not be interpreted as evidence of an impact on the independently verified accounting performance.

In the future, the study could be expanded to also include fintech collaboration in unlisted commercial banks and other financial-service providers. Longitudinal research may have the potential to help us understand the relationship between fintech partnerships and financial performance over time. Future research has the potential to include objective financial measures as reported in audited financial statements as well as managerial perceptions to give a more holistic account of financial performance.