Motivation and the background

In nowadays transforming economy, banks are constantly facing new challenges and customer expectations requiring them to revolutionize the way they operate. In recent years, digitalization impacted many industries by introducing innovative ideas and implementing new ways of working (Autio et.al., 2018). Logically, incumbent organizations are concerned about losing market share due to disruption from other banks, fintech firms, or non-banking organizations since the boundaries of markets and industries are blurring. On top of that, decreased trust in the traditional banking system after the financial crisis of 2008 made customers even more responsive to the performance and actions of the incumbent banks (Uslaner, 2010). Overall, with the rise of technologies, globalization, and easy access to information, customers are more aware of global challenges, which in turn impacts their consumer behaviour towards more sustainable businesses.

Consumer readiness to pay a premium for items created by firms that operate in a sustainable manner has increased in the last decade (Kum et al., 2016). Consequently, shifting to a new business model is crucial not just to increase the performance and regain customers' trust but simply to survive.

According to Volberda et al. (2018), the business model reflects elements of the business, the connection between them, the value creation process, and how it impacts the competitive strategy.

Accordingly in the banking literature, the attention on the banking business model increased from 2 articles in 2002 to 25 articles in 2020 (Hanafizadeh & Marjaie, 2021). As an explanation, according to Hanafizadeh and Marjaje (2019), the increased scholarly attention is due to the aforementioned financial crisis and the rise of fintechs. Wilson et al. (2010, p. 154) argue that "the scale, scope, governance, performance, and the safety and soundness of financial institutions" in terms of the business model need to be reconsidered. One of the responses to those concerns is a purpose-driven business model, where the purpose is incorporated into the value creation of the business. It has become increasingly clear that clarity of purpose is vital for a company's survival (Kim et al., 2021).

Even though there is no agreed-upon definition of higher purpose in the literature, there are common

features that show it is a contributing aim that is tied to the firm's day-to-day operations but goes beyond profit maximization. The "why" of culture, the aims toward which cultural ideas, values, and rituals are oriented, is provided by an organizational higher purpose (Bunderson & Thakor, 2021).

According to Thakor and Quinn (2020), Corporate Social Responsibility (CSR) and purpose are closely related, however, CSR goes broader than purpose since purpose can include topics and activities related to CSR but not vice versa. For the sake of simplicity, CSR is treated as a proxy for the purpose in this paper. The increasing significance that businesses place on CSR has been extensively documented, indicating a definite move toward sustainability. According to a survey conducted by Blasco and King (2017), 93 percent of the world's largest firms by revenue publish information about their CSR initiatives in their annual financial reports. This obviously demonstrates that CSR awareness is already well-established in the corporate sector. However, because it might be difficult to comprehend how and what CSR should be in practice and how it should be applied on a firm level, a framework that tries to quantify the CSR activities of corporate entities is advantageous.

Environmental, social, and government (ESG) metrics offer a complete framework for categorizing and conceptualizing CSR actions for better understanding for investors, businesses, and scholars, where “E” stands for the environmental impact, “S” for the social dimension and “G” for governance variable (Deng et al., 2013)

As a response to shifted consumer preferences and increasing focus on corporate sustainability, the emergence of new companies was inevitable. One of the biggest examples of purpose-driven companies and sustainability-oriented organizations are fintechs and start-ups.

Overall, a start-up is considered a driver of sustainability and transformation in the industry it operates (Palmie et al., 2021). The topic of sustainability and purpose in fintechs is usually prominent from the beginning of their foundation since the main idea behind them is to help to relieve the pains of the consumers (Hammadi & Nobanee, 2019). In recent years multinational non-banking tech firms and different startups innovated new applications that are more user-friendly and customer-centric, hence forcing banks to reassess their current market positions and become more open to market

interactions including collaborations, partnerships, and mergers with fintech startups (Kohtamaki et.al., 2019). It is usual practice to believe that both startups and incumbent organizations tend to benefit from the collaboration.On one hand, startups have the ability to be more agile, innovative, technologically advanced, and sustainability oriented. On the other hand, incumbent organizations have the experience and expertise in the industry.

There are several ways organizations can collaborate. One of the ways that has been studied by several authors in business and management studies specifically is the topic of sustainability and Mergers and Acquisitions (Aktas, De Bodt, & Cousin, 2011; Bettinazzi & Zollo, 2017; Gomes &

Marsat, 2018; Gomes, 2019; Goergen & Renneboog, 2004). Most of that literature has looked at the relationship between corporate sustainability and CSR activities of acquirers and targets and traditionally dependent variables in M&A studies like post-merger and post-acquisition performance (Aktas, De Bodt, & Cousin, 2011; Deng, Kang, & Low, 2013; Bettinazzi & Zollo, 2017), price premiums (Gomes & Marsat, 2018), uncertainty (Gomes, 2019), and shareholders value (Goergen &

Renneboog, 2004). Despite a wide range of coverage of these two topics, very few authors focused on the influence of intangibles like purpose on the likelihood of those M&As, partnerships, and collaborations happening in the first place. Because purpose-driven banks are more concerned about their customers and society overall, it is more likely that they tend to pursue partnerships with fintechs to better fit the customers' needs in a sustainable way.

Based on the existing academic research I see a clear gap in the connection between purpose and its impact on the collaboration between fintechs and banks. This research provides an insight into how higher corporate purpose influences the collaboration between banks and fintech companies and contributes to the existing literature in both directions: a purpose-driven business model in the banking industry as well as strategic innovation and alliance literature that cover topics of interactions of the company with other companies. There is no research including both variables in one study, thus, it brings relevant academic implications. Table 1 presents the current research in the related fields of collaboration and purpose that can overview the relationship between them.

Authors Focus Relevance Jensen, 2010 Value maximization and

stakeholders’ theory

The management’s considerations about all stakeholders involved impact the company’s choices and decisions

Deng et al., 2013 Corporate social responsibility and stakeholder value maximization

Being purpose-driven increases trust between stakeholders and lowers transaction costs

The market perceives the deal in a positive way in case of the high CSR engagements from the acquirer because it is

recognized as the maximization of stakeholder value

Gomes, 2019 CSR influence on M&A transactions

There is a higher chance of the deal happening between two companies if both have a strong orientation towards

environmental and social goals.

If both the target and the acquirer share a similar vision toward corporate social responsibility and activities related to

that, the success of the merger or acquisition is higher

Vallaster, 2005;

Kautonen et al., 2020

Startups’ roles.

Sustainability in SME

The start-ups are purpose-driven and have high CSR standards

Das and Kumar, 2006 Strategic Alliances and learning dynamics

The choice of the partner will be positively influenced by mutual environmental, social and governmental capabilities.

Das and Teng, 1998 Strategic Alliances and confidence in partner

cooperation

The more trust there is, the higher the confidence is in the collaboration or alliance.

Learning more about an alliance partner can affect decisions about joining and learning more about new partnerships. As a

result, learning-about not only relates to advancing a particular partnership but also to whether a company

establishes new ones Table 1. Overview of the important empirical studies on the related concepts