63% of customers across the globe are using fintech products or services, according to Capgemini and Efma. Most particularly, penetration is the highest in emerging markets and among millennial population, but is also expected to increase in all geographies and ages, the firms claim in a report.

The report, which draws on one of the industry’s largest customer surveys with responses from over 16,000 customers across 32 countries and 140 industry executives, found that fintech ventures are increasingly attracting referrals, new customers, and gaining trust.

Users claim that fintech ventures are providing products that are easy to use (82%), services that are faster (81%), and an overall good customer experience (80%).

Customers said they would rather recommend fintech providers (55%) to their friends and relatives, rather than their own bank (38%). Only 15.9% of customers said they are likely to purchase another product from their bank, “pointing to the need for more innovative product development,” the report says.

In reply to the increasing competition, banks in more than 85% of countries have improved customer experience. That said, younger generations remain the most unsatisfied, raising concerns about the ability of traditional banks to meet the higher expectations of these segment.

While over 90% of banking executives believe that change is accelerating towards digital banking, only 12.9% say they have the systems in place to support the change.

“Banks are underestimating the value fintech firms provide in delivering a good experience and efficient service, as well as their potential influence on all areas of banking,” the report says.

Findings suggest that banks are struggling to respond to “increasingly aggressive fintech competitors.” 65.3% of banking executives said they view fintech firms as partners and pointed out that the most appropriate ways to partner with these ventures are through collaboration (45.5%) and investment (43.6%).

“Banks and fintech firms will need to work together and leverage each other’s strengths to create the best possible future ecosystem,” the report advises. “By being proactive, banks can reduce the risk of being marginalized as the ecosystem evolves.”

The report argues that APIs are essential to the future of banking as they offer the ability to take advantages of fintech assets such as speed and creativity. While some have embraces the open architecture of APIs, the industry as a whole still has a long way to go.

Additionally, regulation such as the EU’s Directive on Payment Services 2 (PSD2), which aims at establishing the legal foundation for the creation of an EU-wide single market for payments, will further pressure banks to expose banking core ledgers openly and transparently to third-party solution providers.

“Today’s partnerships are a stepping-stone toward a much bigger role banks are expected to play in creating a digital banking ecosystem. In the emerging ecosystem, existing bank infrastructures and new fintech technology will both play strong parts,” the report claims.

By teaming up with fintech ventures, banks can be “better equipped to meet rising customer expectations for enhanced experiences and innovative services,” it states.

“They can explore ways of generating revenue from fintechs that want to tap their expertise in traditional banking areas like risk management and payments. Putting a price on assets like geo-enhanced data, customer authentications and money transfers could held banks generate new revenue streams.”

Capgemini and Efma’s ‘World Retail Banking Report 2016‘ echoes previous papers released that advise for more collaboration between the banking and the fintech sectors.

The Economist Intelligence Unit issued a report in December last year, arguing that banks and fintech startups have more business interests in common than issues that divide them.

Another document, by Deutsche Bank, claims that banks and fintech ventures should collaborate rather than compete against each other.

Finally, in Accenture’s ‘Fintech and the evolving landscape’ report, the consultancy firm argues that banks should consider fintechs as enablers, urging them to assess, adapt and adopt new technologies.