Banks throughout the world will soon have to make the decision of either helping upstart technology companies or working against them. Startup technology companies are able to provide banking services that are often cheaper and more convenient.

These startup technology companies are able to offer online banking applications that are easy to use and appeal to the needs of customers. Banking companies will either have to develop their own technology or team-up with the companies that already have resources.

Because of the weak relationships between banks and their customers, banks are vulnerable to competition from startup companies and established companies such as Apple and Google. Banks will have to choose whether or not to assist new entrants into the market by providing loans for the young companies.

Since 2009, profits of banks have recovered, surpassing $1 trillion globally in 2014. The banking industry currently makes more profits than any other industry. This success has attracted more than 12,000 startup technology companies that threaten to shrink the profit margins enjoyed by banks. These startup companies often offer cheaper services than are usually offered by banks.

Banking analysts from McKinsey wrote in a report, “The window for making this choice is narrowing. Banks must decide soon, probably within three years, or the choice will be made for them.”

The retail banking industry faces a risk of anywhere between 20% and 60% of their profits in the situation. Banks have already experienced a drop in margins, which has resulted in lower returns among lenders.

In order to work with new startups, lenders must use the data that they already possess to improve online banking applications, as most people are making the switch to online banking services rather than traditional mailing services.

The report said that banks should also focus on switching their messages that emphasize the strength and stability of banks to messages that appeal to human emotions.

Report co-author Philipp Haerle said, “Banks certainly have the perception of solidity, of safeness, of competence when it comes to financial services. It’s not that they’re starting from a desperate spot. But of course, the type of brand you need in this new environment is different.”

Some banks have already started working with new companies. For instance, Banco Santander SA created its own app that enables customers to track their spending. The app is used in conjunction with Apple Pay.

Other banks could decide to let the technology companies focus on the customers, while the banks concentrate on the functionality of their core services, such as checking accounts. This could reduce costs incurred by banks.

Haerle says, “To do this successfully, you will need to run this in a very effective fashion with relatively low cost. The transition is anything but easy. It takes years.”

However, some banks are skeptical of new emerging companies.

JPMorgan Chase & Co. CEO Jamie Dimon wrote in a letter to shareholders, “Silicon Valley is coming. We are going to work hard to make our services as seamless and competitive as theirs. And we also are completely comfortable with partnering where it makes sense.”

Whether or not banks will team-up with new technology companies, it seems that banking is only going to become more convenient in the near future.

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