According to PwC’s Canadian Banks 2016 report: Embracing the FinTech Movement, Canadian banks are focused on responding to the threats – and opportunities – posed to the banking industry by new companies building financial technology (fintech) solutions.

Fintech offerings range from competing financial services, such as alternative lending, to additive solutions atop existing banking services, to enabling technologies for the banks themselves.

According to the report, banks have a great deal to gain from fintech innovations, which may become essential in propelling the sector forward by reimagining operating models, streamlining costs, increasing reach in underserved markets, innovating through new product development and opening new revenue streams.

The increasing momentum of fintech firms and their success is challenging banks to devise a spectrum of strategic responses. However, not all fintechs pose the same threats or opportunities. In some cases, fintechs will be viewed as enablers to traditional innovation and continuous improvement. In others, it presents a series of disruptions and threats as the companies continue to make inroads into banks’ traditional territory by offering competitive services or products. Canadian banks will ultimately employ parallel strategies that comprise collaborating with and leveraging some fintech methods while innovating to compete with others.

“Canadian banks must stay the course with a long-term view and continue, as they have, to respond to the needs of an evolving market to create a stronger ecosystem that will position them to be even more competitive on a global level. This must encompass business model innovation, technology and architecture enablement, as well as cultural evolution to align with the new realities imposed by the tremendous uptick in the Fintech space,” said Diane Kazarian, National Financial Services leader of PwC Canada.

Canadian banks are not only including responses to fintech as part of their growth strategy, they are investing in ecosystems which will position them to better compete in the market. Building an environment that produces innovative offerings is essential to be competitive in the years to come.

For Canadian banks, embracing fintech isn’t a short-term play. Here are six considerations that the financial services sector must consider when integrating fintech into their strategy:

• Act now, but think long term. It’s time for the financial services sector to establish a clear, long-term fintech strategy that not only allows for disruption, but embraces it.
• Think from the customer’s perspective. Gen X and Gen Y will assume more significant roles in the global economy over the next decade and millennials are bringing radical shifts to consumer behavior and expectations. It’s vital that banks look at their own products and services from a customer’s perspective to better understand the points of friction.
• Adopt new thinking around getting concepts to market. The financial services sector should strive to emulate the start-up model and culture to attract talent and rapidly develop products and bring them to market.
• Invest in the future by investing in technology. Banks must continue to assess new technologies and invest in those that fit with their business strategy and help them become innovation leaders.
• Collaborate. Technology and customer expectations are changing quickly and banks must respond with according speed. It’s about understanding what customers want and assessing whether banks have the skills and technology to deliver.
• Stay the course—and don’t slow down. The financial services sector must stay focused on the larger goal and increase their investments in fintech. Given quarterly financial pressure, the temptation to slow down will be considerable but not strategic.

The report also indicates that Canadian banks continued to see strong performance in 2015, achieving positive revenue growth and posting solid returns. They also improved their 2016 first quarter results over last year despite a slowing economy, slumping commodity prices and low economic growth.