How Open Banking Meets the Needs of the Creator Economy

The creator economy—consisting mainly of content creators who make money by doing what they love and sharing online—has never been more influential than it is right now. Many people are leaving the standard workforce to monetize their hobbies or pursue their passions by joining the creator community. From artists and musicians to influencers to entertainers, creators rule the online experience.

In a post-pandemic society, following the cultural shift of the work-from-home revolution, creators and consumers alike are pouring their money, time, and resources into the creator economy. 

People all over the world rely upon online content creators to keep them in the know about the latest news, trends, entertainment, and so much more. With the rise of the social media ecosystem and mass online consumption, these small but impactful businesses are leading the world into new territory: the innovative and forward-thinking 2020s. 

As exciting and lucrative as content creation is, there are unique challenges that the creator economy faces. This includes keeping up with quickly-advancing technologies, competing against big social media platforms, or simply earning enough money to live on through building online communities. Creators must make connections with their customers, optimize social media, and simultaneously move people to their website—all while building a business ecosystem of their own.

The New Challenge for Creators: Funds

Not only do creators have to compete in a crowded online space, but establishing a stable income and securely managing funds can also be difficult. While making a living in the creator economy has been tough since its initial development in the 2010s, the mass use of smartphones, advancing mobile technology, and influencer marketing on social media have significantly changed the overall financial structure. 

There’s also been a few changes in the primary source of funds. Rather than being solely supported by sponsored companies, the creator economy is becoming funded by the fans. 50 million creators with a variety of backgrounds, services, and skills need access to fairly earned funds, while worldwide consumers need a secure way to submit their payments. There are so many ways to advertise and bring in funds—such as social media platforms that now offer creator funds, which was spearheaded by TikTok. Outside of traditional products or direct services, creators generate revenue through fan engagement, such as:

With such a diverse, unpredictable range of content income, eCommerce in the creator economy is outrunning customary banking. The good news is that financial services are evolving with the creator community; namely, Open Banking. Open Banking is at the forefront of advancing the creator economy, which will ultimately streamline funding processes, safely transfer money, and stabilize the economy of content creators.

What is Open Banking?

Open Banking provides users with the option to share data and information with third-party providers, such as merchants or service providers, through APIs, or Application Programming Interfaces. This creates a more open, but still secure, channel for services that can be tailored to an individual's needs through direct payments to someone’s bank account.

What’s the significance of this type of banking? Financial institutions, such as traditional banks, have been the source of money management, the keepers of our financial history, and the authorities of our financial value. With almost exclusive access to our financial data, banks have a certain control over financial services to the public.

However, because the Open Banking system allows individuals to directly and securely share their financial information with third parties, people can now have immediate control over their funds and financial goals. Instead of being trapped by ineffective banking systems, this new system offers more freedom and transparency for individuals no matter the source of income, which is perfect for content creators since they often need access to different services.

A Brief Look into APIs

Our financial information is some of the most powerful and at-risk data due to scammers, which is why security via APIs is so important for digital banking. Application Programming Interfaces are the technology that allows a party to safely access data from an operating system, application, or service. Put more simply: APIs help computers, computer programs, and computer applications communicate. 

You can almost think of an API as a middle man that securely connects the source of the data to a third-party system: APIs deliver a user response to a specified system and then sends the system's response back to the user. Think of a waiter in a restaurant—you have a request for the food you would like to order and the kitchen has the tools to make that order. How does your request get to the kitchen? And further, how does the kitchen get your order back to you? A waiter. Similarly, an API takes requests from users to systems and from systems to users.

Anytime you use the internet, an API is in the background, making that connection happen. For example, if you want to check the weather on your phone app, you open the app and send a request. The application connects to the internet and sends specific data to the server, and once the server interprets that data, it sends a response to your original request.

In the case of Open Banking and the creator economy, APIs conduct communication and data sharing between two services: digital financial providers and the other financial institutions. APIs are also used when the customer—both creators and the consumers of their content—uses the services of Open Banking. With permission from every group, all three parties securely communicate, access data, and streamline services because of APIs.

What are the Benefits of Open Banking?

Open Banking has the potential to greatly influence the financial world as we know it, especially for the creator economy. Here are some of the primary benefits everyone can look forward to.

How does Open Banking meet the needs of the Creator Economy?

As up-and-coming media leaders and influencers, content creators are in a unique position to lead the Open Banking revolution. With the consumer experience being the driving force behind successful Open Banking, both content creators and their consumers benefit greatly from Open Banking for the creator economy.

Designed for variety

Content creators usually need to optimize multiple platforms, and different platforms require different strategies. That means on one platform such as YouTube, you may be doing sponsored product placement, which requires one type of payment; and on another platform such as Instagram, you’re hosting live virtual events that target your fans directly. Creators need a flexible way to compile their sources of income, track their history and trends, etc.
 

Your income as a creator doesn’t fall into a typical category either—it’s likely irregular and unpredictable, which can make it difficult to qualify for certain services or build financial stability. Open Banking offers more convenience and protection for creators and consumers alike. Some services allow people with little credit history to access the funds they need now, which can be helpful for someone who doesn’t have a steady income. Because it’s easier to qualify for certain funds, you can usually get faster credit offers, streamline mortgage processes, and even on-demand payroll. Secure and transparent data sharing opens a lot more doors to third-party financial services that can make the most of someone’s income, no matter how inconsistent or uniquely obtained the funds are.

Connect with a wider audience

Another financial obstacle for creators is connecting with and building opportunities for people all over the world. The impact and use of the internet is a global phenomenon, meaning you could be based in a completely different country than your largest audience base and still require secure means of payment. Open Banking allows for global financial transactions that are secure and individual—consumers on a different continent can still purchase a service or product, win a prize, contribute to your funds, etc.

Plus, not everyone has access to traditional banking options; but, because Open Banking connects unique financial services and established banking institutions, even those that would normally be unable to pay have other options. To put it simply, Open Banking works at scale for the creator economy, which means no matter how wide you cast your net, your audience will have access to what they need.

Less friction, more funds

The path of least resistance is a powerful concept. The simpler and more transparent the payment method, the easier it is for fans and consumers to actually contribute to your content. A consumer only needs to authorize the payment in one place, as opposed to entering card details every time. Money transfers also happen instantly, which is a rewarding and convenient perk for customers. Instead of losing important monetary leads because fans are unsure of a payment method, creators who offer an Open Banking option can guarantee fast, user-friendly payment options.

This adds to the trustworthiness of a creator’s brand and also streamlines a creator’s business ecosystem. There are even automated checkout options for many Open Banking apps that boost conversions and payment acceptance, which helps creators retain old customers and attract new ones. Because fund transfers are instantaneous, creators can enjoy more immediate access to their money, too, so if you need a new piece of equipment now for your upcoming project, you have access to on-demand cash flow.

Use a Financial System that was Designed for the Creator Economy

If you’re a content creator, you’re anything but conventional. You are creative, you push boundaries, and you solve problems with a unique set of skills. Although Open Banking is a bit unconventional, it’s meant for creators. Just like them, Open Banking is pushing the boundaries of traditional financing, and solving problems for the modern age of the creator economy.

Open Banking options like Trustly are built to support the creator economy and people who have unpredictable and non-traditional incomes. Whether you just need a consistent payment service, depend on access to immediate funds, require a better way to collect money from patrons, or even need more flexibility in your credit and financing options, Open Banking can make a world of difference.

Still curious about why Open Banking is perfect for the eCommerce world of the creator economy? Learn more with Trustly, one of the leading voices in Open Banking today.