Banks are entering what could well be a Golden Age — deregulation, rising interest rates, and a bevy of fintech startups eager to hop into bed with them.

Will they take advantage of this fintech opportunity?

“Banks now have the capital to put to work and invest in growth after a long period of cost-cutting,” Alvi Abuaf, SVP and head of financial services consulting at Capgemini, told Bank Innovation. “They can now use the capital to fuel growth.”

Capgemini–a global tech consultancy–advises banks in the area of innovation strategy and digital transformation. Abuaf said the company is looking forward to the era of growth, which should of course lead to growth for Capgemini and companies that serve banks as well. “We’ll see all forms of that drive toward growth, and acquiring fintechs is one example.”

But acquiring a company with a nifty technology is just the start.

“Acquiring a fintech doesn’t solve a bank’s problems,” Abuaf said. “It may even eliminate differentiation and innovation on the part of the fintech.” A better plan than swallowing fintechs whole, might be to acquire them and leave them outside, and incorporate capabilities inside the bank walls where appropriate, Abuaf said.

Fintechs do many things well — Abuaf noted that some have proven their services can delight customers, but banks have capabilities fintech companies need as well, such as the rock-solid ability to protect customer data. “Banks that invest in fintech tend to do so at the 10% to 15% level, not to exceed 19%, so they don’t have to consolidate,” Abuaf said.

Mike Dudas, co-founder of deep-linking tool for apps Button, discussed how Chase, which recently acquired the mobile payments service MCX, might also be in the market for LevelUp. (The “you guys” in his tweet refers to PayPal.)

https://twitter.com/mdudas/status/842345812743098373

Abuaf said that all banks today are looking at AI and increased automation in the backoffice, as well as API use and opening services to fintech companies or other industries, and, of course, blockchain.

“Blockchain, like no other technology, has the ability to to revolutionize banking,” Abuaf said, but added this was still a ways off. “We will see the payoff in all the work being done today in three to five years,” he predicted.

So, the future is bright for banks, Abuaf said, and fintech companies should take hear in that, because that is where their future lies.

“They are symbiotic, as long as they can figure out how to work together without negatively affecting each others’ capabilities,” Abuaf said.