UBS is giving away thousands of dollars and hundreds of hours of coaching to fintech entrepreneurs and startups that can help it with technology.
The Swiss bank has launched a competition dubbed "The Future of Finance Challenge", a global search for startups that can help it improve key areas.
UBS is after startups working in 4 areas — client experience, products, efficiency, and security. They're pretty broad so the bank shouldn't be short of applicants.
UBS says it's "looking for innovative and potentially disruptive technological ideas and solutions that will support the transformation of the banking industry."
Winning entrants will receive up to $50,000 (£32,000) in cash, with $125,000 (£80,000) up for grabs overall. Startups will also get mentoring from top UBS executives. Business Insider revealed last month that the bank's chief information officer Oliver Bussmann, who runs tech globally, has been personally mentoring fintech startups in London.
UBS say that through the "Future of Finance" competition it will help entrepreneurs "commercialise and scale their ideas and technologies by leveraging on [UBS's] significant global presence [and] deep expertise in global banking."
But why is UBS doing all this? CIO Bussmann sums it up in the emailed statement, saying: "Digital disruption is driving an unprecedented transformation of our industry and radical new technologies present a unique opportunity for a step-change to our client offerings."
The subtext is: upstarts are using technology to do things faster and smarter than we can, so we need to harness their expertise to improve what we do before our customers jump ship.
Since the financial crisis cheaper technology, a distrust of banks, and layoffs at finance companies have created the ideal conditions for a wave of innovation in finance. Things like peer-to-peer lending, crowdfunding, and new payment technologies have exploded over the last few years.
Businesses like Funding Circle and TransferWise, not even around when 2008 blew up, are now worth over $1 billion (£640 million) and are chipping away at discreet parts of banks' businesses. When you look at the hundreds of other startups aiming to eat into different parts of the banks, you realise it's big problem.
In the past, banks would have simply developed rival products and tried to compete the upstarts out of existence. But onerous compliance requirements since the 2008 crash mean banks are in most cases too slow to keep up with nimble rivals.
There's a growing realisation that the best thing for banks to do is to buddy up with smart, young businesses to learn what they can from them and do what's best for the customer.
Amy Nauiokas, a former banker turned founder of fintech investment firm Anthemis, expressed this to me when we spoke recently.
She believes there's a "changing tide in technology for financial services that is coming in a large part away from the banks", and says: "Banks are appreciating that the pace of change is such that it matters to look externally."
Anthemis has backed innovative fintech startups like social trading platform eToro and Climate Corporation, a company that provides insurance for farmers based on weather data and sold to US agrochemical giant Monsanto for $1.1 billion (£700 million) in 2013. It was also an early investor in online property portal Zoopla.
Nauiokas says: "I think where you’ll see the success stories is with banks and financial institutions that recognise they can’t do it all, but instead identify the areas in technology reform where they do have an edge and partner with someone to do the rest. That’s going to be a model that will be very successful for some financial institutions."
That's exactly what UBS is doing. Barclays is too, through its partnership with accelerator TechStars on a fintech specific programme in London. And Santander is also hoping to tap into the expertise of startups through not one but two venture capital funds targetting fintech.