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 |
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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. |
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