Latest great guest post by Jaimie Anzelone, see her last one here.

I was on my way to Money 20/20, one of the industry’s largest Financial Technology (FinTech) conferences. As I sit on the flight to Las Vegas and review the agenda, speakers and can’t miss parties, it really hits me; in the last five years, FinTech has significantly altered the banking landscape, triggering Financial Institutions to rethink traditional banking.  The expectation of society’s on-demand lifestyle has not only led to the creation of these FinTech companies, but is now empowering them.

I attended Money 20/20 on behalf of EEI, where we will be promoting direct connectivity, via EEI’s FS-API™. If you don’t work in the FinTech space, you may think this blog and this conference don’t apply to you. You couldn’t be more wrong. You may not work in FinTech, but every day, you PLAY in the FinTech space. Your wants, needs and options drive the industry to be better, more convenient and more secure than ever before. How do you access your financial data? Do you wish there was an easier, more convenient way to watch your spending, manage your income, view your savings or download your credit card statements? If you answered yes to any of these, you’re not alone and Financial Institutions are feeling the heat. In today’s reality, the pressure for Financial Institutions to provide efficient and secure data access methods for their account holders is mounting.

There are over 1,000 FinTech companies globally, at all stages of evolution, and industry investment continues to pour in. These remarkable companies are at the height of innovation. Some started in the traditional innovation labs of major banks. Others started as two friends who needed an alternative to carrying cash.  For these FinTech companies to continue to thrive, they need secure and direct access to Financial Institutions.

Consumers are no longer satisfied relying on bank-offered interfaces. In growing numbers, they prefer to interact with their banks through unrelated, third party applications. Unbeknownst to most, these third party applications acquire 90% of their financial data through “screen scraping,” a method that is:

  • Unsecure, untrusted & risky for both the Financial Institution and the consumer
  • Flawed
  • Unreliable
  • Results in stale information

Screen scraping not only affects the consumer and Financial Institution, but the entire FinTech ecosystem. Persistent data challenges can lead to reduced trust in the user’s financial application, reduced availability of application functions and eventually push the user towards alternate solutions. While this won’t stop consumers from using third party applications altogether, it might cause them to leave banks that make it particularly hard to access their data.

At a Financial Institution, an Application Program Interface (API) is a natural fit that could standardize data sharing and equalize access to financial data. I like to imagine the API as a bridge that begins at my Financial Institution and ends at my personal financial application. A well-designed API will provide a safe and authorized direct connection to these third party applications. This allows for a natural partnership between Financial Institutions and FinTech companies. Through a rich API, Financial Institutions can gain a competitive advantage and put their customers in control of their finances by providing real-time, secure data.

The future of banking is collaborating with FinTech companies to share data, not shield it and simultaneously lock customers out. Every FinTech company is an opportunity for Financial Institutions to gain a competitive advantage and unlock innovation. Financial Institutions can reject these disruptive technologies or they can embrace them. I hope they choose to embrace them.

This is part of my FunTech blog series; FinTech through the eyes of a Millennial.

Wallet or Smartphone: The FinTech in Front of the FinTech by Jaimie Anzelone

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