The consumer-driven demand for financial data integration has seen major changes in economic legislation over the past few years. APIs are integral to a high-quality banking experience, which has changed banking.
The financial services sector
Financial operations have become highly automated, mobile, and flexible. Using APIs also helps optimise individual wealth management as people no longer require financial consultants. Third-party apps are used to analyse financial data and make reasonable suggestions.
Banking institutions are no longer the exclusive providers in the financial sector. Businesses and developers have entered the industry and they are changing the landscape. The sector is competitive, meaning that innovation is advancing and customers are benefiting.
The digital-banking revolution has meant that new standards and regulations must be introduced to secure data. Fintech startups are revolutionising the industry, improving standards, customer care and flexibility.
The global demand for the changes that fintech have introduced are forcing traditional banks to reshape their products and services. Some of those changes are pushing traditional banks to make changes, but should they transform and drop the past or incorporate changes?
Traditional banks operate in a closed data model. They are the sole owners of their customers’ data and they control that data. Banks compete based on fees and interest, not customer services or product offerings or convenience or customisation.
Mobile payments, eCommerce and smart devices have empowered people to control their finances 24/7 from anywhere in the world. People are also more mobile than ever before, travelling for work or pleasure and working from remote offices. Fintech stepped up to offer people and businesses the services they needed to enable them to live this way.
For traditional banking, the fintech movement meant that they had to step up their game to offer the real services that people wanted. However, people like the stability that traditional banks offer, and most people choose to find a place for both fintech services and traditional banking to support their banking needs.
Banks are facing big shifts. They need to focus on technology, such as offering multiple digital banking channels that complement each other and which are integrated and intuitive. Numerous fintech projects have become valuable partners to traditional banks offering new apps or payment options, international banking solutions and merchant services.
Open banking also creates drives enhanced data security and transparency policy. Banks and fintechs are being pushed to improve security from more than a pin code and password, to incorporating multi-level access and biosecurity checks to protect people online.
One of the main benefits of financial data stored in one place is what it gives customers. Banks are able to assess customers’ money management habits, financial goals, and needs. This means improved services and access for customers. Rather than traditional banks controlling their customers, customers have wrested back control through the advantages of technology. Digital banking eliminates the need for omnipresent physical branches, making banking in remote regions accessible to them thus far millions of unbanked in the world.
Technology has transformed traditional banking by forcing a draconian institution that controlled customers into service at the mercy of customers. While traditional banks are busy catching up with fintech and fast offering the services people have wanted for so long, it might be too late as many people have abandoned traditional bank for fintechs.