21 Apr 2022 By PAYCEC
The traditional banking model is under threat as a result of the increasing use of "Open Banking" and the emergence of digital banks and fintech companies. Here are some differences between Open Banking and Traditional banking:
|Open Banking||Traditional banking|
For today's consumers, digital banking is critical.
Consumers can access banking service 24/7
Focusing on in-person customer service and a system of branches and headquarter.
Accessibility may be lacking with banks that do not have online banking capabilities
|Open Banking helps customers connect with other banks within the system easily.||Customers may pay higher transaction fees or be unable to withdraw cash when there is no ATM of their bank when traveling.|
|Banking consumers benefit from instant payment when shopping in-store and online||No real-time payment.|
|Banking services can connect with other digital payment methods like e-wallets: Paypal, Apple pay, Google pay, etc.||Cannot share data with third parties.|
|Open Banking operates based on an open API architecture that integrates best-of-breed business functions.||Traditional banking software was created as a self-contained set of pre-integrated business processes. API interoperability was not possible with these functions.|
|With the rise of digital banks and fintech firms, the market has seen plenty of new competitors offering more agile digital products, innovative user experiences, data-driven insights and tailored products and services.||Competition is only for banks and financial institutions.|
|The adoption of Open Banking creates revenue-sharing ecosystems, customers and merchants will benefit from subscriptions and referral services.||There is no recurring payment applied.|
|Arousing the risk of data violation.||More security and data protection.|
|There are more big tech companies that embark on the market like Google, Amazon and Apple as well as Fintech firms.||Only banks and financial companies participate in the game.|