Pivotus Ventures, a new venture capital firm launched by Umpqua Holdings Corporation, believes that drastic action is needed to keep banks relevant in the coming years.

If any FIs can do it, Umpqua is certainly among them. Just last year, the Portland, Oregon-based corporation performed the rare feat of upgrading its core system, and is known for its quirky and innovative marketing and strong customer loyalty.

BBVA made a similar move earlier this year, spinning off Propel Ventures from its in-house venture arm. There are plenty of reasons for venture arms to exist outside bank walls, such as freedom from certain regulatory requirements, and distance from banks’ reputation for being slow to move on deals in an industry where speed is crucial.

Here’s how Pivotus is described in an Umpqua press release:

Pivotus Ventures, a subsidiary of Umpqua Holdings Corporation, is an innovation studio chartered with imagining and creating key technologies and business models that aims to transform finance and commerce. Pivotus was founded by a group of startup entrepreneurs looking for a way to combine the power of the startup model with the direct access to capital, customers and infrastructure that only exists within established financial services institutions.

“Everybody knows about the Innovators’ Dilemma,” said Steven Gotz, Pivotus’s managing director. “We think there’s an opportunity to have some semi-permeable membrane [between disruption and collaboration] we can execute in parallel.”

Pivotus plans to do this by developing a model capable of synthesizing the nimble qualities of startups with the capital and distribution advantages that FIs can offer. Nowadays, every big bank has its own innovation lab. Taking a different approach, Pivotus will work with the long tail of smaller banks and startups who rely on outsourced providers for their extra-transactional customer engagement.

Disruption is an historical inevitability for every industry, and Gotz knows this better than most, because he worked with AT&T Labs during the Napster era. While the music industry did backflips to keep the status quo, AT&T had already invented the technology necessary for compression algorithms and security measures (e.g., Advanced Audio Coding, or AAC, sometimes considered to be the successor to the MP3 format).

[We were] spinning out a secure platform at basically the same time Napster emerged. We got to see how existing incumbents reacted to this outside disruptor. We were at the table with a solution in-hand. The CEOs of those companies dug their heels in and refused… Now everybody is using iTunes, which is based on the tech AT&T had developed back then.

To Gotz, if major corporations don’t respond to the wholesale transformation of the economy, businesses as disruptive as Uber, Airbnb, and the like will pop-up across vast swathes of the economy, cutting one industry after the next down.

Banks have an opportunity to preempt what’s happening. Different organizations are playing around with inside-out innovation, something that retains the essential organizations, and yet makes them flexible enough to take on the new innovations as they come.

It’s easy for fintech disruptors to discount the value of distribution that FIs can bring to the table. Moreover, relevant to fintech or not, customers have attained immense trust in banks over the past century. It’s been a heck of a ride.

Gotz carries the notion further:

We’re not passive capitalists, either. There’s a place for venture funds, but early in the process there’s a space to come in and provide more resources. The biggest risk for entrepreneurs is building something nobody wants. By working with our partners, some of that risk is mitigated, because we talk to their customers, look for opportunities and use that to drive our work. Our challenge is to leverage all of Umpqua’s resources to really do that.

Embedded in Pivotus’s name is the notion of pivoting, normally associated with startups, but it seems Pivotus will help banks change course too.