The announcement of plans to launch Facebook’s Libra digital currency has triggered a wave of existential angst throughout the banking world.

The Bank for International Settlements commented that the currency could “rapidly establish a dominant position” in the global financial sector. In the UK, David Duffy, chief executive of CYBG, recognised that “the time when banks thought they control everything in their universe is over”.

The fear for the incumbents is simple: Silicon Valley is coming to eat our lunch. These fears should be heeded with caution, but I would also argue that they are potentially misguided – financial services has everything to gain from embracing the technological revolution, partnering with innovators to shape the future of banking. This is not a zero-sum game.

The entrance of Facebook into financial services could be viewed as the beginning of the end for the traditional world of global banking. Or it could be viewed as a collective call to action, inspiring banks to harness the exceptional entrepreneurial talent that is already shaping the future of FinTech.

Embracing the change and the new revolution of the next chapter of innovation will solidify the old world with a new generation of consumers.

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Conservative and constrained financial goliaths are once more facing David’s sling shot and this time it is loaded with software. Future generations will set the bar for financial services, demanding relationships built on trust, interactions enabled by technology, and products shaped around experience.

The only way that I can see financial institutions embracing these values and remaining competitive – particularly as the Silicon Valley titans set their aim on the finance sector – is through backing and partnering with start-ups and scale-ups.

The good news is that many of the banks, mutuals, insurers and other financial services companies are already making substantial investments and commitments to the growth of UK FinTech.

Nationwide Building Society, one of the more venerable British financial institutions, puts its weight firmly behind entrepreneurial innovation when it launched a £50m venture fund a year ago. Likewise, Barclays UK Ventures are exploring immensely valuable partnerships and investments in fintech firms through their Eagle Labs.

So, the banks are also providing some seedbeds for talent and innovation. In my role as Northern lead for Beringea, a transatlantic venture capital firm, I have met with a host of entrepreneurs schooled in traditional financial institutions and applying their knowledge to emerging technologies.

Nivo, an instant messaging and identity verification platform focused on financial services, secured £2m in May in a funding round led by GP Bullhound. The business was spun out of Barclays and its founding team bring a wealth of experience of developing and scaling products within the bank.

Similarly, Bankifi, which is harnessing open banking to transform cash management and payments led by an immensely experienced financial services leader who currently advises the board of Nationwide on its technology strategy. Bank North, a recently launched challenger bank focused on the small business sector, is also led by former Atom, Metro, and RBS executives. 

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The foundations are being created for a thriving UK-based FinTech ecosystem. However, there is plenty more to be done to keep the FANGS from biting down hard on financials.

First, we must champion the importance of FinTech to the future of the Northern and wider British economies. The impact being made by these entrepreneurial businesses, which raised more than £1.6bn in venture capital in 2018 alone according to Innovate Finance, must be front and centre of our economic strategy for the next decade.

The Northern Powerhouse rhetoric has dominated headlines for years, but we must be clear that it is not an initiative that can simply dedicate itself to building heavy infrastructure. The digital economy must play a crucial role.

Given the North’s heritage of banking innovation – from the foundation of First Direct in Leeds to CYBG embracing Virgin Money to build a lifestyle partnership – we are well placed to harness the potential of FinTech across Northern England.

Second, we must focus on building connections and collaborations within and outside of the FinTech ecosystem. These will deliver the partnerships that enable the sector to prosper. Fintech North, an organisation focused on the rise of the industry within Northern England, has made a substantial impact.

However, its impact will be strongest if we cast the net beyond traditional financial services – FinTech could play a vital role in gaming, e-commerce, education and data science, so collaboration across these industries will be pivotal. 

It is telling that there is not a single bank in the roll-call of companies that have contributed to the Libra initiative. Rather, the founding partners are a network of mobility companies, such as Lyft and Uber, marketplaces like eBay and Mercado Pago, as well as payments giants including Mastercard, PayPal, and Stripe. Regardless of the potential flaws of the system, it has inspired cross-sector collaboration that many banks could learn from.

It is clear that the Silicon Valley titans have firmly set their sights on financial services – sooner rather than later, software will feast on the financial world. Maybe you do not yet trust Facebook to manage your finances and perhaps the banks are not yet ready to become tech titans, but perhaps together they could build something that consumers love.

The bankers must dip their toe into the water and begin to work alongside entrepreneurs throughout the UK to transform an ageing industry.