CUSTOMERS of Square Inc, the Silicon Valley payments behemoth, might assume that the cash they send to friends on the platform is housed in a glassy building in Silicon Valley, tended to by hoodie-clad tech workers. Actually, that money is more likely to be sitting in a 117-year-old community bank in Iowa.
Partnerships between high-flying tech companies and traditional banks, many of them tiny by comparison, are a key force behind the financial technology boom. Because virtually no tech companies have the licence required to perform banking services, many of them partner with existing banks to offer a suite of services including checking accounts, credit cards and the back-end and regulatory work the tech companies aren’t equipped – or allowed – to handle.
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