At first, traditional banks ignored the new-age financial tech companies. Then they dissed them. And now they are joining them.

In the next five years, almost 50% of the world’s financial services are planning to acquire fintech startups, according to a report by PricewaterhouseCoopers LLP. Collaborations, too, are expected to increase, with eight out of 10 companies waiting to partner with these new players, the report added.

Some 67% of senior Indian financial sector executives believe their business is at risk following the rise of fintech firms, and 95% of them were willing to explore partnership with them, a separate report by PwC released this April revealed.

And it has already begun.

On July 27, Axis Bank, the country’s third-largest private sector lender, acquired FreeCharge, a payments application and mobile-wallet company, for Rs 385 crore ($60 million). This is the first such deal in the sector, potentially setting off more such transactions in the future, believe experts.

The deal

Axis Bank’s buying of FreeCharge from e-commerce firm Snapdeal will bolster the lender’s position in the payments space, giving it access to the e-wallet’s 50 million customers. The bank’s customer base could now more than double from the existing 40 million.

“We want to use digital payments as an entry point for these customers and, thereafter, help them open an account with us,” Rajiv Anand, Axis Bank’s executive director for retail banking, told Quartz.

The size of the Indian e-wallet industry is likely to shoot up from Rs 154 crore in 2015-’16 to Rs 30,000 crore by 2021-’22. Not surprisingly then, FreeCharge had other suitors, too, such as other fintech firms like Paytm, PayU, and MobiKwik, besides e-commerce major Flipkart.

So Axis Bank now gains access to a set of young, digitally savvy users, a segment that has been a key focus area for lenders. This acquisition comes at a time when the number of smartphones in the country has increased rapidly and more customers are opting for e-payments, even as internet penetration expands dramatically.

It also makes sense for the bank as the overheads of setting up branches can be avoided.

Fintech companies have been credited with building new payments categories such as mobile wallets, peer-to-peer lending, and online loans – something the old banks failed to do. Now, the incumbents have no choice but to either quickly adapt or collaborate with the disruptors.

“The database is the most precious element in such businesses. If you collaborate with someone, no one gives you the data because that is their asset,” explained Abhizer Diwanji, partner and national leader, financial services, EY India. “In India, data is scarce and so companies are willing to put a premium on it. So banks will be willing to pay a price for a company that has a substantial customer base and has done some data analytics. Therefore, initially we will see more acquisition which will later change to collaborations.”

The banking regulator, too, has been prodding lenders to tie-up with fintech players.

Axis Bank is first off the block.

This article first appeared on Quartz.