Accounts Under Threat

The humble demand deposit account remains a cornerstone of financial services for decades; yet, banking customers who manage all their finances through a single financial institution are becoming increasingly rare.

Concurrently, fintech companies have evolved from niche, one-off solutions to comprehensive financial ecosystems.

James Wester, Co-Head of Payments at Javelin Strategy & Research, and Craig Lancaster, an Analyst/Content Specialist at Javelin, highlighted in the 2026 Debit Payments Trends report that open banking, coupled with innovative payment channels, demands financial institutions rethink their traditional strategies to maintain relevance.

Reintroducing Friction

The advent of open banking has gained significant traction in major economies. Despite the existing U.S. financial infrastructure and regulatory approach, a formalized system of open banking is impending.

The concept of having open access via APIs to data and accounts—though it may evolve based on regulations and market dynamics—is here to stay,” Wester said. Customers want this flexibility; small businesses and commercial clients also desire it.”

This growing demand for open banking stems from the convenience fintech companies offer, even if they don’t provide FDIC insurance.

Traditional peer-to-peer models involved bank accounts linked to services like Venmo or Cash App. Now, fintechs such as Venmo offer independent debit cards,” Wester explained. While these new players may not threaten the conventional banking relationship entirely, they are changing how consumers interact with their finances.”

This shift has implications for the core demand deposit account and customer relationships.

Ripe for Exploitation

Real-time payment rails, like FedNow and RTP networks, are gaining ground in the U.S., showcasing real-time settlement benefits. However, this speed also poses challenges.

Traditionally, friction was seen as a negative,” Wester noted. Yet, it served to flag suspicious transactions, accidental mistakes, or fraud. Real-time payments create immediate settlement issues that need timely fraud management tools.”

The absence of such tools can exacerbate tensions between fast payment adoption and consumer protection.

Playing to Strengths

This evolving landscape requires financial institutions to adapt, recognizing that customers increasingly want a connection with their bank. Historically, banks viewed customers as more dependent on them than the other way around.

However, as consumers have more options, power dynamics are shifting.

Financial institutions must focus on lifetime value and how customers grow over time,” Wester said. Offering solutions like car loans, mortgages, or 401(k)s can lead to higher profitability.”

Banks should consider debit rails as a means to become central in overall financial health rather than just providing FDIC-insured accounts for bill payments.

Fighting for Deposits

The traditional demand deposit account is less critical now, with consumers opting for various financial platforms. Banks will need to compete harder for deposits as they rely on them for loans.

As stablecoins and other crypto forms gain traction, pulling money out could impact banks significantly,” Wester warned. They must adapt strategies to secure these deposits.”