Grow, if you know what’s good for you – that’s one of the key takeaways from a new Boston Consulting Group report on the challenges community banks face from “digital powerhouses” intent on encroaching on their customer base.

The report, released last week, sees a future in which incumbent banks could have their customers in key business lines stolen by huge digital players such as Google and Amazon. Owing to the entrenched nature of day-to-day banking relationships, the report concludes, most banks have kept most of their customers loyal and have not ceded market share to nonbanks. But BCG said that any complacency among traditional banks could lead to severe setbacks.

“Banking revenue pools are just too big and too attractive for today’s digital giants to ignore forever,” Monish Kumar, a New York-based BCG senior partner and coauthor of the report, said in a statement. “Banking CEOs must set a comprehensive digital transformation in motion to replace the incremental initiatives that are so common today. This will enable banks both to drive disproportionate market share gains against slower competitors and also to defend themselves against the digital giants.”

The report examines banks’ overall recovery since the 2008 financial crisis, as well as the specifics of what banks must do now to position themselves optimally for the future. BCG said banks need to start acting like digital giants before digital giants act like banks. The report also says that while most banks have ongoing initiatives concerning some or all of these dimensions, they lack the urgency required to truly embrace the necessary digital transformation, in part because such a transformation will take years.

“Bank leaders know that digital technology and changing customer behaviors will take the industry in new directions. But many of them no longer think that disintermediation is likely in the near term. They expect an inflection point that will signal it’s time to move faster. That inflection point, however, is already here,” Kumar’s co-author and BCG partner Shubh Saumya said in a statement.

The report’s key takeaways for banks include:

• Drive to scale: Sheer size gives banks a much greater ability to invest in marketing and technology. It also means larger customer bases and more data.
• Leverage big data, analytics and AI: Using data and analytics can make banking easier and more personalized for customers, as well as more profitable for banks. When combined with big data, AI can, much earlier than traditional methods, help banks identify customers who might leave for another bank.
• Chase partnerships and digital talent: Banks should develop talent internally and partner with, or even acquire, high-caliber fintechs or boutique software engineering firms. For the things they cannot do well on their own, banks must develop a partnership strategy that may include direct partnerships with one of the digital giants like Google or Amazon.
• Ensure cybersecurity resilience: All of the good things that banks are trying to do with the help of digital technology – create step changes in convenience, turn their customers into advocates, and operate more efficiently – can be undone by security breaches. A best practice for banks’ chief risk officers is to identify best-of-breed providers and to form strategic partnerships with promising fintechs and “risktechs.”