As financial institutions adapt to shifting customer expectations and regulatory demands, the lines between traditional banks and fintechs are increasingly converging, driven by demand for hyper-personalization, faster payments and data control.

Fiserv, which provides financial infrastructure and payments solutions to FIs, is adapting by offering open, scalable platforms and cloud-native core systems such as Finxact, along with access to faster payment networks, including Zelle, FedNow and other real-time payment networks, Tim Ruhe, vice president and head of payments strategy for digital payments at Fiserv, told Bank Automation News.

The company is also expanding its fintech marketplace, AppMarket, to help financial institutions integrate third-party tools and accelerate digital deployment, he said.

“AI, API and cloud technologies are woven into the fabric of everything we do,” Ruhe said. “They allow us to power faster payments, smarter fraud detection and customer insights that enable our clients to compete at scale.”

Fiserv bridges fintech innovation with institutional scale by enabling FIs to deliver fintech-style experiences through embedded services and modular technology, he said.

Stripe, Cash App dip into banking

More financial institutions recognize the value of blending fintech agility with banking infrastructure and see the benefits of partnering with banks, Jeff Flynn, director at Citi Ventures, the venture arm of $1.6 trillion Citi, said during a recent BAN webinar.

Stripe, for example, recently applied for a Merchant Acquirer Limited Purpose Bank charter in Georgia to expand its U.S. financial capabilities.

“We’ve significantly expanded the number of banking and other partners we work with,” a Stripe spokesperson told BAN. “This application helps us ensure we have an even broader range of options to support our users.”

Meanwhile, Zelle on April 1 phased out its standalone app, citing the deep integration of its services within bank mobile platforms. Cash App and Robinhood are also continuing to roll out banking features once exclusive to traditional institutions such as debit cards and high-yield savings.

Leveling the playing field

The American Fintech Council (AFC) is also committed to expanding the reach of fintechs, Ian P. Moloney, senior vice president and head of policy and regulatory affairs, told BAN. The AFC on April 8 joined the Financial Data Exchange (FDX) to advocate for technical standards that promote secure, consumer-permissioned data sharing and interoperability across the ecosystem.

“We believe in a model where consumers — not institutions — control how and when their data is used. Standard-setting is crucial to shaping a fair and competitive financial ecosystem.”

— Ian P. Maloney, SVP and head of policy and regulatory affairs, American Fintech Council

AFC’s focus is on ensuring that emerging data infrastructure does not favor larger, more established institutions at the expense of smaller fintechs and innovative community banks, Maloney said.

“Standardization should support competition, not consolidate control,” Moloney said. “We are committed to ensuring smaller fintechs have the technical and operational access they need to thrive.”

Winning in open finance

AFC’s move to join FDX signals a strategic shift in fintechs’ approach to open finance, Pranati Dave, practice director at consultant Everest Group, told BAN. Rather than working around legacy systems, fintechs are now seeking to shape industry standards directly, Dave said.

“In this emerging landscape, success will not be measured solely by the number of fintechs integrating with bank APIs or the volume of data shared.”

— Pranati Dave, practice director, Everest Group

“The true litmus test lies in outcomes: Are consumers gaining greater financial agency? Are new entrants competing on merit rather than access? Are underserved markets being designed for at the protocol level? These are the questions that will define the winners of open finance — and the relevance of the infrastructure they help build,” Dave said.

APIs have become a competitive edge for financial institutions, enabling large banks to monetize data and smaller ones to form strategic partnerships in an increasingly digital landscape, Dheeraj Maken, practice director at Everest Group, told BAN.

Next phase

Fiserv anticipates continued momentum for bank-fintech collaboration around real-time money movement, embedded financial services and predictive digital experiences tailored to individual users, Ruhe said. The SMB segment presents an opportunity for collaboration because many business owners are also high-net-worth retail clients, and financial institutions are looking to serve both segments more holistically through tech integration, he added.

“The next phase will see a significant uptick in advisory-driven banking, hyper-personalized experiences and real-time payments,” Ruhe said. “It will be fueled by financial institutions at the center, moving money with speed and efficiency, but complemented by fintechs enhancing and augmenting the customer experience, especially for specialized tools and market segments.”