Traditional banks, in particular, have been forced to reckon with fintech firms that are delivering digitized services in a quicker, easier, more cost-efficient fashion. That’s led to a “structural shift” in the industry as banks have increasingly looked to partner and work with fintechs, according to Victoria Treyger, general partner and managing director at Silicon Valley venture capital firm Felicis Ventures.

“The growth in mobile adoption and penetration has been so massive, especially by Gen Z and millennial [customers],” Treyger said. “They are driving the demand by the banks for a better customer experience.” 

It is a dynamic that is mirrored on the investment side of the industry, said Eric Poirier, CEO of wealth management data platform Addepar. “Banks are a huge client of ours—they know they need innovation,” he noted.

The relationship between banks and fintechs is reciprocal, however. Roy Ng, co-founder and CEO of fintech software platform Bond, pointed to how neo-banks like Chime typically rely on established banks to hold customer deposits. “Behind every large fintech like Chime, there is a bancorp,” Ng said, noting that the dynamic at hand is more than just “banks versus fintechs.”

“A lot of banks are jumping into the [fintech] fray,” he added. “They’re innovating themselves, but also looking for partnerships.”

Immad Akhund, founder and CEO of SMB-focused banking fintech Mercury, said that while traditional banks do play a key role in enabling fintech services, it is customer-facing fintechs who are creating most of the value in the industry. “Every fintech company does have a bank behind it—but when the innovation is at the customer layer, that’s where the value is,” he said. 

Akhund noted that U.S.-based fintechs often need to partner with banks because of federal financial regulations, whereas other countries have “much better fintech banking charters” that provide startups more autonomy. Ng, however, said he believes that gradually, “the rest of the world will look more like the U.S.” in how they regulate fintech. “Over time, the regulators will catch up and they’ll manage [fintechs] like banks.”

Eric Dunn, CEO of personal financial management software provider Quicken, described card and payment processing fees as a “skunk in the room” that is primed for disruption by fintechs. Akhund grouped banking fees under that category; he noted that they disproportionately harm lower-income customers and small businesses, and predicted that they will largely “disappear” over the next five years. (On Wednesday, Capital One announced that it is eliminating all retail overdraft fees, while the Consumer Financial Protection Bureau said it is heightening its oversight of that practice.)

In turn, Akhund predicted that the next five years will see the four largest banks in the U.S. “all be worth less than $100 billion” as a result of tech-enabled competitive pressures. (JPMorgan Chase, the largest bank in the country, is currently valued at more than $466 billion.) “All of them are fighting in exponential ways against fintech—and in the next five years, fintechs will become much bigger, and it’ll be hard for them to sustain market cap,” he said.