Commercial banks need innovation partners not execution machines

Commercial banks are ready to innovate, but their service providers (SP) are stuck in execution mode. As banking leaders push for modernization, they face a critical roadblock—their providers are not innovating fast enough. Wholesale banks need real-time liquidity, non-banking services such as insurance, and cost-income breakthroughs powered by emerging technology such as GenAI and fintech partnerships. However, most providers aren’t stepping up fast enough.

This data viewpoint (part 2 of our two-part series) unpacks the innovation shortfall exposed in our recent research, HFS Horizons: The Best Service Providers for Commercial Banks, 2025. In part 1, we explored project delivery gaps. Now, we reveal why service providers are failing to deliver on the innovation banks urgently need.

Commercial banks are unimpressed with their service providers’ innovation muscle

In our latest research, clients rated providers poorly on IP development, R&D investment, and effective fintech collaboration. While mid-tier providers drag down the average, SP’s partners’ poor ratings are consistent across both large and mid-tier providers. Some service providers have progressed with domain-specific IP in areas such as commercial lending, treasury, and trade finance. But, commercial banks demand more verticalized assets to accelerate both execution and innovation across the commercial banking value chain. Banks should not settle for delivery alone; they should expect vision.

Fintech integration remains a weak spot for service providers

In the era of AI / GenAI, fintech partnerships can fast-track delivery and inject real innovation into commercial banking solutions. Leading fintechs, such as Stripe, Tradeshift, InfraFi, Uniphore, and OnDeck, are building niche capabilities that serve commercial banks’ evolving needs directly. Yet, as called out by clients and partners, service providers are falling short in orchestrating and integrating these high-value partnerships effectively.

Commercial banks don’t need more implementers; they need integrators who can stitch together fintech capabilities with enterprise-scale delivery. Providers risk losing relevance in the next wave of commercial banking evolution without bold innovation moves and stronger fintech integration.

The Bottom Line: Execution is table stakes; commercial banks must demand innovation leadership from their service providers.

The GenAI revolution has made it clear that banks that treat technology as just another IT function will fall behind. Commercial banks must now use technology to rewire how they operate, serve clients, and compete—from real-time treasury and trade finance to AI-driven lending and compliance. However, banks cannot achieve this alone. They need partners who can integrate fintech innovation, deliver verticalized solutions, and scale rapidly.

Commercial banking leaders must do their due diligence and select service providers that align best with their long-term business goals. Choose partners capable of executing today’s mandates and innovating for tomorrow’s opportunities. Settling for less could result in being left behind in a rapidly evolving digital economy.