“The most significant danger to enabling such a transition is not Apple or Paypal but Plaid. The emergence of open banking and the drive for banks to expose consumer data to authorized parties enabled a whole new breed of companies. These companies can leverage bank APIs and existing ACH or RTP functionality to verify that an account is authentic, that you are the owner, and that it has funds. Additionally, many of these opening banking connectors or aggregators can trigger an authorized movement of funds from one account to another.
Suppose this scenario were to play out at scale. In that case, the banks run the risk of being large transitory deposit institutions where customer relationships are lost, along with the ability to cross-sell lucrative products. This is why it’s time for banks to build a digital wallet. It is imperative that banks maintain the connection with their customers any time that customer interacts with their money.”