A new report by Capgemini, one of the world’s largest consulting firms with a yearly global revenue of more than $13 billion, announced an imminent tipping point for Fintech, an umbrella term used to describe the provision of novel financial services through the use of technology with Bitcoin a prominent example.

The report, based on a comprehensive survey of 16,000 customers in 32 countries and interviews with 140 industry experts found that nearly two-thirds of customers are using a fintech service or product with the greatest adoption in emerging economies.

Winning hearts and minds

They are winning hearts and minds, giving them a “top-of-mind” advantage as users are almost 20% more likely to refer a fintech company than a bank. Moreover, they are earning trust with almost 90% “somewhat or completely” trusting their fintech provider.

In combination, the report paints a picture of an imminent tipping point as nimble, fast, cheap and tech savvy start-ups peel off “specific pieces of the banking business such as payments, loans or deposits, and develop niche offerings that are highly attuned to customer preferences.”

In contrast, while almost all banking executives are of the opinion that an evolution towards digital banking is underway, only 12.9% believe their “core system” can support this new ecosystem. However, learning from the digital disruption of the media and publishing industry, the banking industry seems to be taking an “if you can’t fight them, join them,” approach with 65% of bank executives saying they view “fintech firms as partners.”

The Banks Are Coming

The World Retail Banking Report 2016 in combination with “Banking Reimagined: How Disruptive Forces will Radically Transform the Industry in the Decade Ahead”, a recent report by Deloitte, urges banks to take proactive action and collaborate or invest in fintech companies so as to adapt to the new environment, but also take a leading role and shape its direction.

A prominent example is Goldman Sachs which invested in Circle as well as Circle’s partnership with Barclays which suggests a changing attitude by banks towards digital currency businesses. More widely, a consortium of almost all global banks has been formed, R3. Alongside digital assets and other blockchain tech startups, it aims to adapt bitcoin’s blockchain technology to bankers’ needs. Individually, a day doesn’t go by without a bank announcing a new blockchain initiative, hackathon or innovation lab.

However, as fintech bridges finance and technology, banks may face competition from Silicon Valley’s giants who have been sitting on hundreds of billions of dollars during the Great Recession. Sometimes more tech than fin, especially Bitcoin and blockchain technology, companies such as Google, Apple, Microsoft, IBM, Intel may find themselves better placed to lead what some are calling a fourth industrial revolution. They have announced some initiatives, such as Hyperledger, an industrial consortium including IBM, Intel, Cisco, Redhat and others.

Millennials, the most educated generation in history and the first to grow up in a digital age, may hold the keys, especially as they move into key positions of responsibility in public and private institutions and see their purchasing power grow. Due to the very novel nature of blockchain tech, skills are in shortage. Their individual choices for startups, banks or Silicon Valley may be the decisive factor of how blockchain technology develops. A contributing factor may be the approach banks take. Specifically, whether they truly embrace innovation and respect Silicon Valley values of privacy and empowerment.

It is too early to say at this point how players will position themselves. What is certain, however, is that bitcoin’s and blockchain’s development in the next decade will be fascinating to follow.