The Reality of Secure Bank Account Linking in the Modern Age

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

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.