Challenger banks are posing a real threat to traditional banks. How real of a threat? According to a new Citibank report, the incumbent banks face up to a 30% revenue hit thanks to competition from digital-first banks as well as big tech players like Google, Amazon and Apple, which are slowly making their way into the financial services landscape.

The solution, Citi says, is that traditional banks should launch their own digital brands. 

“The new banks are designed around meeting current customer expectations, leveraging data insights via agile technology stacks to offer customers better personalization and fully digital banking experiences,” the report reads. “Challenger banks also tend to be quicker at incorporating new products/processes into their platform and help to easily connect with third party products — offering more choices to the end user.”

Some major banks like JPMorgan Chase, Goldman Sachs and Capital One are already doing just that. Last year, JPMorgan rolled out Finn nationwide last year, targeting digital natives and millennial customers. Finn doesn’t have physical branches, but its customers can use JPMorgan Chase’s ATM locations, thus leveraging resources of its larger parent institution, while running on an independent standalone platform. Goldman Sachs has done something similar with Marcus, its consumer lending digital platform.

Capital One, on the other hand, chose to set up a new platform parallel to its existing core. Capital One 360 offers independent products and services from the parent bank.

“Self-imposed challenger banks are going to be a big trend,” Andrew Beatty, SVP product management executive of Global Banking Solutions at FIS told Bank Innovation. Beatty worked on Citizens Financial Group‘s launch of its digital-only standalone Citizens Access, which has grown to about $4 billion in deposits, mostly from new customers outside the bank’s traditional footprint, since its launch last year.

Also Read: Citizens Access Targeting ‘Optimizers’ to Grow Deposits Beyond the Bank’s Footprint

Aside from customer experience, digital stand-alone banks can help traditional banks reduce costs too, the report said. This is because “similar to other gig economy sectors, digital banking can run with less full-time employees,” according to the Citibank report. This could drive cost savings of 30%-50% for larger banks over time, based on the report.

In fact, N26 USA  CEO Nicolas Kopp previously told Bank Innovation that the mobile-first bank operates at a fraction of the cost that a traditional bank does because it has no branches. N26, which is posed to launch in U.S. later this year, instead invests that capital in its technology, Kopp said.

Read Citibank’s full report here.