The banking industry is one rife with competition. Not only are banks competing against their fellow incumbents, but they’re also at risk of losing chunks many of their revenue-generating products to new entrants. Banks, generally, aren’t known for their agility, but they do play a fundamental role in the modern economy, supporting businesses and consumers with essential capital and expertise.

In a recent FinTech Alliance Fireside Chat with David Duffey, CEO of Virgin Money chat about Covid-19’s impact on FinTech, our CEO, Al Lukies made the point: “the broader FinTech ecosystem is there to disrupt and take market share from the banks. But it takes a crisis to realise that the aqueducts of government money and support is always going to come through a regulated entity.”

Despite being a bedrock for our economy, many banks are at risk of falling behind because of these new entrants. With Neobanks and FinTechs continuously snapping up market share, and big tech’s insatiable appetite for a slice of the payments industry, the situation has only been exacerbated. And, of course, the world has changed recently. But by accelerating the need for banks to deliver the digital products their customers now need more than ever, COVID-19 may be the catalyst that leads them to greater collaboration with faster moving FinTechs. In this period of great uncertainty, banks may have been given an opportunity to place a greater focus on the experience of their customers and providing a user experience to set them apart from competitors.

A number of catalysts have accelerated the digital transformation of the UK’s banking sector over the past 12 years: the widespread fallout from the Global Financial Crisis in 2008, the advent of Open Banking and APIs in 2016, the granting of 36 new banking licences, and now the Coronavirus pandemic. In fact, KPMG found that British FinTech companies attracted over £38.4bn of investments in 2019, an increase of 91 percent from the previous year, with London holding onto its spot as the FinTech capital.

Now more than ever, banks need to consider where their revenue is going to come from and how best to support their customers in the future. There is value in the merchant relationship, through payments themselves in the first instance, but also the ecosystem of services and around potential data insights from payments. Banks are in a better position than anyone to leverage their vast data pools and use it for their customers’ benefit.

With the high street under lockdown restrictions and already under pressure from digital competitors, many consumers have turned to online retail as their first option. At the height of the crisis, global daily ecommerce sales rose by an incredible 66 percent. And with almost three quarters of British consumers reluctant to venture out in the run up to Christmas, 56 percent said they’d do more shopping online than they have in recent years. But for those that do brave the high street, concerns that the use of cash could spread the virus have led to an increase in the use of contactless payment methods. According to Barclaycard, 90 percent of face-to-face transactions carried out in April 2020 were contactless.

By working more closely with technology companies, banks can devise innovative solutions that will not only help support consumers and businesses in these trying times, but also facilitate their own digital development.

Banks across the world are realising the benefits of partnering with innovative fintechs. Swedbank and Spare Bank work with Minna Technologies to help those banks’ customers manage subscriptions, and Deutsche Bank has partnered with Traxpay to integrate supply chain financing technologies and solutions within Deutsche Bank’s own offering. NatWest, for example, worked with Pollinate and software developers Endava to create Tyl by NatWest, a merchant payment platform that enables small businesses to accept contactless, and telephone payments either in-store, over the phone, or using a mobile terminal. Most recently, National Australia Bank (NAB) entered a multi-year partnership with Pollinate to transform its merchant acquiring offering for SMBs across Australia.

COVID-19 has radically changed the landscape for everyone, forcing banks, retailers, and consumers to rethink the way they act and transact in light of an ever-shifting raft of rules, regulations, and health concerns. In doing so, it has exposed strengths and weaknesses inherent in traditional banking and payment systems, and the fintechs looking to move into their space. At the same time, it has highlighted the massive demand from consumers for digital products and services, something banks are well-positioned to leverage

It’s during this period of upheaval, as with the financial crisis of 12 years ago, that banks find themselves at a tipping point. Banks need to digitally transform if they are to prosper. So, it’s likely that those forward-looking banks, bold enough to take a leap of faith and collaborate with fintechs to better serve their customers as well as for mutual advantage, will be the ones that weather the storm and thrive in the years to come.