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Regional banks are fortifying collaboration with fintechs, in an industry-wide move to overcome waning competitive edge in digitization drive and extended downturn in the anemic growth potential in the non-Seoul metropolitan areas, market watchers said Friday.

Underpinning the joint cooperation is mutual benefit from the cross-use of each other's revenue model. Fintech's platform users can be integrated into the lenders' customers and vice versa. Also strengthened will be tech-powered innovation drive. Decades of sales expertise from regional lenders tailored to the needs of the residents can offset disadvantages for the late entrants.

According to the financial market, Kbank and BNK Busan Bank signed a partnership, Wednesday, to launch a joint household lending program in the latter half of this year.

Products for small businesses and the self-employed will be introduced.

Kbank app users can apply for a loan, after which the internet-only lender and Busan-based lender will review the request and set the maximum amount borrowable as well as the borrowing rates.

The joint drive followed the success of a similar initiative led by Toss Bank and Kwangju Bank, a banking subsidiary of JB Financial Group.

Unsecured loans for salaried workers introduced in the third quarter of last year generated sales of 5.874 trillion won as of Wednesday.

JB Financial Group CEO Kim Ki-hong said up to 10 trillion won in profit is expected from the product by 2025.

BNK Kyongnam Bank signed a partnership with Toss in November to roll out loans for entry-level salaried workers.

KakaoBank plans to launch a similar product with Jeonbuk Bank in the first half, pending approval from the Financial Services Commission.

Jeonbuk Bank introduced car loan products with fintech company Finda last April.