Alliances in Financial Ecosystems: A Source of Organizational Legitimacy for Fintech Startups and Incumbents

Financial ecosystems are transforming around new financial technology, or "fintech". As such ecosystems transform, the basis for being seen as legitimate also changes for all actors. Thus, alliances between actors within financial ecosystems are increasingly formed to help gain, maintain, and repair organizational legitimacy. From interviews with fintech startups in Sweden and with venture capitalist firms investing in fintech startups in Sweden, we explore the intertwined quests for organizational legitimacy in a transforming financial ecosystem. As Swedish fintech startups seek to establish a sense of their legitimacy, simultaneously incumbents seek to maintain and repair their organizational legitimacy. Adopting a legitimacy-based view of strategic alliances, we set out the aspects of organizational legitimacy that incumbents and fintech startups look for in a potential partner and how these aspects meet the legitimacy needs of each partner. We argue that alliances further enhance the organizational legitimacy of both fintech startups and incumbents.