Although there are many tools to help individuals improve their financial lives, the findings of an ING worldwide survey revealed that what consumers say often contradicts with what they do when it comes to sharing personal financial information via open banking, because technology is evolving so quickly. Financial institutions and FinTechs can help customers adapt to a changing banking world.
The ING team noted over the last 10 years there has been a mainstreaming of tablets, smartphones, crowdfunding platforms, self-service capabilities, contactless payments, wearable tech, voice-activated digital assistants, and other Internet of Things (IoT) devices. Fintech provider Finastra also revealed the appetite for Open Banking is picking up pace, with 86% looking to use open application programming interfaces (APIs) to enable open banking capabilities.
During the pandemic, open banking fintech needs throughout the U.S. transformed from an upward trend to a surge of digital channels and app use. Millennials, Gen-Xers and even Gen Yers no longer want to drop in on their local banking branch for their financial requirements. They want access to banking services not at their financial institutions’ location, but from their digital device, which is usually right next to them.
This mandate, along with the arrival of ground-breaking technologies, is generating an innovative system embedded through APIs that permit bank services and personal information to reside on third-party apps. In the last few years, APIs have grown from in-house tools to critical elements that link organizations and enable new application and system advancement. The swing from traditional banking to distributed banking, represents growth from $3.6 trillion to $7.2 trillion, according to Simon Torrance, finance adviser at the World Economic Forum.
In order to capitalize on this shift toward more open banking many credit unions and banks seek a fintech partnership. Many pursue help in areas to improve their mobile banking and payment channels, personal digital assistants, saving and investment tools, fraud mitigation, payment processing, and artificial intelligence/machine learning capabilities (including chatbots). They also want upgrades to their digital banking platforms to provide real-time and same-day banking services, big data access through open banking to provide customers with personal and actionable insights; and robotic process automation to power existing processes.
Partnerships between FinTechs and financial institution are mutually beneficial. They can work together to benefit both organizations. For credit unions and banks, a solution using FinTech is an opportunity to extend their market reach and connectivity to its customers and provide new revenue opportunities.
Traditional financial institutions can present API access and package payment and financial services to fintech organizations making market moves. Meanwhile, partnering with financial institutions to gain access to financial service APIs and payments capabilities allows fintechs to strengthen their offerings.
NXTsoft’s vendor agnostic OmniConnect Platform, the premier open banking marketplace for all API needs, uses cutting-edge cloud technology to connect fintech solutions to financial institutions, ensuring that NXTsoft clients have the most secure and reliable integration environment in the industry. OmniConnect provides the access needed to the financial institutions information, removing integration obstacles and providing a seamless connection between third-party API solutions and financial institutions’ core digital banking, item processing and financial systems.