People are using new fintech apps to do all sorts of things on their smartphones and devices. For example, they can connect their bank account to these apps and keep track of their spending.
Over the last few years, many apps showcasing different ways to pay, invest, and save, have been invented. They're a great innovation and let consumers manage their money as they please.
At Sila, for example, we work with MX and Plaid for processor token integrations.
Linked bank accounts are crucial to most fintech apps, but there are some potential security risks. When looking to add bank account linking to your fintech app, you may wonder if the cost of a secure B2B payment app justifies its benefits, or if it is even worth adding at all?
What is Secure Bank Account Linking?
Bank account linking is a way to allow transactions to take place between two accounts at the same financial institution, or different institutions, because they are electronically connected. A user must simply enter bank account login details for the accounts to be linked.
The use of mobile banking and fintech apps has made a significant impact on the financial industry. Now, almost 90% of Americans are using one or more types of connected apps, and they're using them regularly. Linking bank accounts within the same financial institution or between a financial institution and a fintech app, is part of this interconnected system. While bank accounts lie at the center of the financial technology ecosystem, it is actually fintech apps and services that round out the ecosystem.
Banks are naturally thought to be the primary providers of financial products and services, which is still largely the case today. Banks are still an essential part of many people's lives and remain a pivotal institution, even in the age of digital financial apps. However, other businesses or brands are now starting to provide online banking services for less money with more features.
These changes in the payments industry have created a whole new economic ecosystem with its own products, thanks to the advent of fintech companies. All this innovation has led to new and improved financial solutions that are gaining popularity. As a fintech startup, you have to make your business more modern and competitive all the time. Partnering with a digital payment service provider to handle your payments is imperative in that respect.
How Does Bank Account Linking Impact Security?
Thanks to the advances made in fintech apps, users can easily keep an eye on their banking anytime and anywhere. Users benefit from the ability to accomplish banking tasks while at home on the sofa, over lunch at work, or away on vacation. With built-in features like depositing checks and paying bills from your phone, it can be a breeze to maintain a hands-on banking relationship.
The digital age has had an exciting impact on banking, with consumers able to monitor their accounts and keep tabs on their household budgets from the comfort of their homes. However, it's crucial to remember the importance of maintaining bank account safety and reducing any potential for fraud. That's because cybercriminals are sophisticated, and cybercrime, like fraud and phishing, is at an all-time high. It used to be that traditional phishing schemes were the norm, but now hackers are using a variety of new techniques to spread malware and steal personal data.
Scammers can try to access your bank account by asking you for a confirmation, or sending a virus to steal your information. As your fintech app becomes more popular, more users will link their bank accounts and more fraudsters will take note. It is crucial for developers to maintain cyber security to make sure these users' interests are protected.
You want to protect your users from scammers, hackers, and fraudsters. The reality of banking in the modern age is that bank account linking can leave users vulnerable to fraud, unauthorized transactions, and identity theft. Linking a checking account and savings account to an app can make managing your money easy; however, your users want to know that unauthorized access will be caught. Doing so will allow your users to benefit from services like transferring money between linked accounts or the ability to deposit funds to grow savings.
To stay ahead of the competition, fintech developers can use Sila's infrastructure to offer secure bank account linking without having to write the code themselves. It allows your users to enjoy a safe, scam-free, and efficient experience.
Who Does Bank Account Linking Affect?
The financial ecosystem has a few leading players that are affected by bank account linking:
Financial institutions are central to the financial world in that they provide people with depository accounts. Traditional banking technology has had a lot more time to mature and develop, so it's unlikely that fintech will replace it entirely. A more likely scenario is that banks and fintech providers will work together in unison, enabled by the range of connected services in the ecosystem. Since most individuals hold their money with traditional banks, these financial institutions provide the foundation for fintech firms to connect to, when building their services. Fintech startups can focus on various services within this segment, such as payments, debit card or credit card issuance, deposits. That's why many fintech apps focus on connecting with existing banks to create easy-to-use services, such as budgeting and investing. One of the advantageous features of bank connectivity is that it makes it easier for customers to find a place that can cater to their bespoke financial needs. This is true for all ages. Younger people might prefer to work off their phone, while other generations prefer a website, or even a physical branch, to take care of their banking needs.
Fintech refers to any company that is not registered as a bank but offers financial services or products that may include traditional banking (neobank). Fintechs may utilize customer data and services from other banks to stay ahead of the curve. Managing these connections to the ecosystem can be done through APIs, direct connections, and intermediate connections.
Fintechs use data related to a user's bank accounts to make financial products and services more streamlined. Often, this comes with a better user experience too. Thousands of fintech start-ups have been created in response to the need for better financial management solutions. There is a vast range of possibilities to choose from today, with many more innovations on the horizon.
To an extent, end users are the ones in control of this connected financial ecosystem. Their choices give them the power to determine who succeeds or fails in fintech. Therefore, fintech companies are always on the hunt for what consumers want and need next. For example, they are constantly looking at where the gaps in the market are so that they can fill them with new products.
Apps will succeed or fail depending on whether people want to share their account information and personal data with third-party providers. The ability to sync accounts with fintech apps has become a prime motivator for consumers. This is why it's so essential to establish trustworthiness and transparency as core principles when you run your fintech business.
How to Choose an API for Secure Bank Account Linking
The API is software that provides data to other applications. The API is the link between the bank account and other applications.
There are many different APIs for bank account linking, but only some are reliable and safe.
Before choosing an API, it's crucial to weigh the pros and cons of each one. Sila provides many benefits to developers and end-users, including easy API integration with multiple partners in our ecosystem that can give you what you need for your app.
When you sign up to use Sila's payment API, your users need to link their U.S. bank account with our system. This way, money can be sent and received through the system. Our bank account linking API makes it easy to connect your app to a bank account without you having to secure the linking API yourself.
Bank Account Linking With Sila
As fintech continues to shape the industry, we know you need to find ways to integrate your fintech tool with the U.S. banking system. Our software is an excellent offer because we combine the U.S. banking system and our proprietary ledger, with an eye for U.S. regulations and compliance requirements. This allows you to work on developing innovative products.
The Sila's API structure is simple. With our bank account linking API, you can quickly link bank accounts, perform account balance checks, and identify fund owners. Our digital wallet API gives your customers a safe, secure way to store money in their digital wallets.
Because we want to help you build your high-quality app, we offer everything you need to create your app for free in our Sandbox.
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