People had to go to a branch, talk to a banker, complete paperwork, and then wait to handle their money for most of the 20th century. That world is fading away.
More and more people and businesses in North America and Europe are using apps to send money, shift money around, and pay bills. They don’t even have to go to a bank to do these things. It’s not as important who made the IBAN as how well it works, how easy it is to alter, and how quickly it works.
The IBAN isn’t going anywhere, but the bank is, says Edgars Lasmanis, the founder of Walletto, a registered electronic money institution in Vilnius. People want things to work, not be formal. They would rather send money right away than wait in line or fill out documents.
The change that will endure a long time is happening faster now. Walletto is a new kind of non-bank platform that takes care of payments, issues cards, gives out IBANs, and helps businesses get new customers. It doesn’t have any branches, old systems, or the usual bank branding.
A Change That Will Last Longer Than a Generation
PayPal in the US and Stripe, Revolut, and Wise in Europe were among of the first companies to offer online payments. This was the start of the change years ago. These companies started out by solving some issues. A new generation of companies is already adding full financial features to their software.
Walletto, a key member of Visa and Mastercard, used to be only for exclusive financial organizations. Now it has advanced features including tokenized payments, mass payouts, and dynamic transaction descriptors.
Our modular method gives modern apps the same capabilities as an entire bank without the cost, complexity, or compliance burden of building infrastructure from scratch. It provides banking functions on demand.
The Role of Regulation and Political Analysis
Regulation has played a positive role in these changes, rather than getting in the way. The EU’s new Payment Services Directive (PSD2) gives Electronic Money Institutions (EMIs) the legal power to issue IBANs, make payments, and issue cards. EMIs can operate like banks as long as they secure their customers’ money. However, they cannot lend money from their own balance sheets.
But this change has also made regulators and lawmakers, notably in the US, worried.
Senator Elizabeth Warren wrote to U.S. financial regulators about the rise of fintechs that offer banking-like services outside of the usual regulatory framework. She said, “The rapid growth of these partnerships risks harming consumers while posing a broader threat to the stability of our banking system and the economy.”
Senator Sherrod Brown, who is in charge of the Senate Banking Committee, stated, “Fintech companies that want to act like banks but don’t have to follow the same rules and protections that banks do put people’s hard-earned money at risk.”
Legislators are worried that decentralizing financial services will make it harder for clients to get help if they are victims of fraud or failure, even as fintech entrepreneurs say these models make things more efficient and lower barriers.
Banks are taking their time to respond
Traditional banks haven’t done anything. Some people are starting their own online enterprises, often under new names. For example, JPMorgan Chase is quietly working on a European retail offering that focuses on mobile from its headquarters in Germany. Others are working with fintechs to find a balance between compliance and innovation.
Many folks are still having problems because of the old infrastructure. The Economist Intelligence Unit says that most international banks say that operational complexity, old technology, and cultural reluctance are reasons why they don’t want to change. However, almost all of them are currently investing in AI, data platforms, and blockchain-based services.
The report concludes that “banks that comprehend the complexities of this new environment will not only endure disruption but will also shape the future of intelligent banking.”
Some academics, like Jim Marous of the Digital Banking Report, say that banks still don’t fully understand how client expectations are changing.
Marous says that banks need to be able to offer a smooth, easy-to-use digital platform that is far more than just a smaller version of online banking.
Cards without banks and a new way to connect with clients
Walletto’s method of issuing cards is a good example of how non-banks are taking over old players at the infrastructure level. Banks with licenses used to be the only ones that could issue cards. Walletto now lets businesses start co-branded card programs all throughout Europe without having to open a bank or get direct Visa or Mastercard membership. These apps can be branded with your logo, work with Apple Pay and Google Pay, are 3D Secure enabled, support chip and PIN, and have a lot of customizable controls.
Lasmanis says, “We’re getting rid of the idea of a ‘bank account’ and replacing it with a more flexible toolkit.” “You don’t need a banker anymore. You need to have a working interface.
Enterprise users can also see the benefits. E-commerce companies, online marketplaces, and businesses that do business across borders all want features like mass payment processing, recurring billing, e-invoicing with built-in links, and real-time monitoring.
“We help merchants who want to grow their businesses internationally instead of spending six months dealing with old setups,” Lasmanis says. “We can give them everything they need in one place because we own the whole stack: card processing, card issuing, and payment processing all on one platform.”
Thinking about the future of Financial Access
As financial services move into apps and APIs, experts think the lines between banks and non-banks will become less clear. Capgemini says that by 2027, digital wallets will handle more than 60% of all online purchases around the world. It is also thought that account-to-account (A2A) payments made possible by open banking might cut debit card fee income by as much as 25%.
In this structure, the financial institution is a layer, not a brand. The experience is the product. Customers now ask how fast, cheaply, and clearly they can get to their money and move it around, not which bank stores it.
“We’re not here to take the place of banks,” Lasmanis remarked. “Our goal is to make the next layer, the one that really helps people.”
Some American politicians are still hesitant, even though skeptics agree that evolution is inevitable. Raghuram Rajan, a former governor of the Federal Reserve and a professor at the University of Chicago, has warned against wanting to go back to the way things were when they were in power.
Rajan says that “lively and competitive financial markets are a very powerful tool for promoting opportunity and fighting poverty.” But they need to keep up with the times.
It looks like that change is already happening in Europe and other places. Banking might not go away, but in the future, it will probably be more mobile, modular, and hard to see. And that future is already here for Walletto and other businesses.
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