Big financial institutions are embracing the challenges thrown at them by smaller financial technology (fintech) players as they strive to cement their relevance in an ever-changing industry.
Traditional big players must venture out of their comfort zone, key figures in the financial industry told The Straits Times.
For DBS Bank, South-east Asia's biggest bank, the way ahead is to take the lead in the fintech revolution.
"We take a big holistic view on the ecosystem, and we took a lot of these processes into our bank to evolve our culture into something more akin to a nimble tech company," DBS chief innovation officer Neal Cross said.
"This year we've already worked with 145 tech start-ups, and we've created 120 new prototypes, many of which delivered within three days. Of these, around 10 are going into production and will soon become our products and features."
Meanwhile, DBS launched its HotSpot programme just last month as an accelerator platform for fintech and digital start-ups.
STILL IN INFANCY
Will fintech solutions replace the high-value, cross-border network any time soon? Not going to happen. There remain many issues with compliance; it's still in a very nascent state. We are a long way away from seeing wholesale changes to the way the industry and payment works today.''
MR EDDIE HADDAD, Swift's Asia-Pacific managing director
This is part of its response to fintech firms out to "destroy banks", as Mr Cross put it, citing examples such as London-based TransferWise, which wages an open price-war with banks on money transfer services.
Another company, cross-border payment and transfer platform World First, told The Straits Times last month that it plans to grow its exchange turnover up to $500 million next year in Singapore, where it has just set up a new Asia office.
Across the world, the rapid emergence of disruptive fintech solutions has underlined the proposition that traditional financial services are no longer necessary. Mr Cross, however, begs to differ.
"Let's put this in the right perspective: Banks are fintech companies too, and the most successful, in fact. Researchers said the fintech industry will be worth a lucky US$10 billion (S$14 billion) by 2018, but that's not even the size of a small bank."
Another big institution facing challenges is Swift, a cooperative created to facilitate secured and standardised financial data exchange among 10,800 members globally.
Mr Eddie Haddad, Swift's Asia-Pacific managing director, said: "Will fintech solutions replace the high-value, cross-border network any time soon? Not going to happen. There remain many issues with compliance; it's still in a very nascent state. We are a long way away from seeing wholesale changes to the way the industry and payment work today."
Yet Swift is responding too, and the large institution is for the first time exploring a larger role in the small-value, real-time transaction segment rife with fintech players.
"We see that as an adjacent space to where Swift plays, and that's why we've been given the mandate a build a new payment platform in Australia," Mr Haddad said, referring to the New Payments Platform going live in 2017 and allowing instant domestic retail payments between banks and customers' accounts.
"If we stayed out of the real-time, low-value space, we might see a collection of fintech services being connected up, and eventually challenging the cross-border correspondence banking market we have."
Meanwhile, Swift is also working with regulators to create a standardised cross-border payment platform as part of the Asean Economic Community initiatives, he added.
The impact and opportunities created by the fintech revolution are not lost on the world's biggest financial industry players, which will gather here next week for Sibos 2015.
The annual financial services conference will arrive in Singapore at a time when the country is transforming itself into an innovation-led economy, which necessarily includes a vibrant fintech sector.
In a speech in May, Dr Vivian Balakrishnan, the minister in charge of the Smart Nation Programme Office, urged fintech institutions to adopt the latest technology and explore new ways to deliver services.
The transformation may already be unfolding on the ground, as three Singapore start-ups - Jewel Paymentech, Codapay and goSwiff - have made it to the top 20 of finalists in the Startup Challenge Finale, a fintech showcase organised as part of Sibos.
Both Mr Cross and Mr Haddad noted that Singapore has the makings to become the next global fintech hub, even though there will challenges along the way.
Mr Cross said: "The single biggest deciding factor that makes a great fintech centre is population. The world's fintech capital is London, and it offers a large population, along with skills and capital. China has all that too. That's why it's rapidly emerging.
"But Singapore has one big advantage, which is the tight collaboration between government agencies, financial industry and start-ups. I can't imagine that happening anywhere else in the world."