In the first half of 2020, $2 trillion in cash landed in deposit accounts of U.S. banks and credit unions, according to FDIC data. From corporate borrowing to cash-hoarding and stimulus checks, the unprecedented surge was a result of the pandemic.

Megabanks saw the greatest deposit gains—they have the most U.S. retail customers, after all, and serviced a large portion of customers in the Paycheck Protection Programs. But the big banks weren’t the only institutions that were flooded with cash deposits. The PPP shifted power within the market according to the “digitization divide,” which continues to create distance between the leaders and laggards.

During the early PPP rollouts, FinTech lenders, such as PayPal and Square, saw client acquisitions skyrocket with the help of their advanced technology platforms—and they were happy to seize the opportunity. On the other hand, many traditional financial institutions, where business lending remains largely a manual process, relied on human hands and legacy tech to handle the challenge. As a result, they forfeited a big piece of the cash-deposit pie.                                                                                               

Many longstanding financial institutions have yet to fully digitally transform. For the business lending process, for example, the power of APIs—application programming interfaces that can replace the need to gather financials, calculate them and monitor them manually—has yet to be harnessed. Many FinTech companies are stepping in to fill the technology void and disrupt the industry. But community financial institutions and FinTechs each have their own advantages, and working together, they can survive the pandemic and achieve the greatest level of success.

Many small to mid-size financial institutions have longevity and have built a high level of consumer trust—but they don’t always have a big budget for R&D or a large IT staff. FinTechs, on the other hand, are nimble digital natives that specialize in designing technology to solve problems. Through a synergistic partnership, financial institutions can benefit from working with FinTechs to gain access to the latest technologies without the burden and headache of operations and infrastructure sustainment.

There’s a long list of processes that FinTechs can target to automate and streamline to help financial institutions. For example, the importance of remote banking and money movement has skyrocketed overnight. Financial institutions can no longer assume that their customers and members will come into the branch to handle important business. At a high rate, banks and credit unions are turning to FinTechs to help create a modern, seamless customer experience that replaces in-person service, which was traditionally relied upon as a competitive advantage.

AI-based conversational voice banking is taking off, with one in three Americans now using a smart speaker, according to the Smart Speaker Consumer Adoption Report 2020. Bank of America reported that 10 million users had downloaded its digital assistant known as Erica as of year-end 2019. Then the bank added one million Erica users per month from March through May 2020 during the pandemic! Banks and credit unions of all sizes need to take note of this use case and seek affordable ways to compete with increasingly popular voice banking offerings (and they can simultaneously offload traffic from their IVRs and call centers).

What’s more, use of live video conferencing has sharply risen during the pandemic. The time is ripe for one-on-one live video conferencing between banker and customer for meetings requiring a live interaction. What’s the holdup? Video interactions need to take place within the digital walls of the institution, within the confines of an application that belongs to the bank.

The pandemic has also heightened the importance of real-time payments, with Americans across the country struggling to keep up with their financial obligations. Banks that cannot quickly launch payment platforms risk falling behind the growing number of FinTechs, challenger banks and other digital-native competitors.

There’s a huge need for advanced technology to fight financial fraud right now, too, as fraudsters are exploiting the pandemic to prey on consumers' financial worries. SocialCatfish.com recently reported that U.S. losses from coronavirus-related fraud and identity theft had already reached about $100 million since the pandemic emerged in March, and complaints of scams had at least doubled in most states.

The opportunities for FinTechs to assume the role of financial-institution-enabler, rather than industry-disruptor, are vast. Partnership is not only a way to survive the pandemic, but it’s a strong strategy for long-term risk mitigation and diversification. So, FinTechs: Rather than trying to “beat ‘em, why not join ‘em?” We can be better together.