What is the difference between DeFi and open banking?

[BlockchainnX]

Open banking (or open banking) refers to a banking system where external financial service providers have secure access to financial data through APIs . This enables the creation of account and data networks between banks and non-bank financial institutions. Essentially, it enables new types of products and services within the traditional financial system.

However, DeFi produce a completely new financial system that is independent of the current infrastructure.

For example, open banking that are allow the management of all traditional financial instruments in a one  application by retrieving data from several banks and institutions in a secure way.

Decentralized finance, could allow the management of entirely new financial instruments and new ways of interacting with them.

[Severine]

Open Banking is associated with data sharing across different parties i.e. their main focus is data whereas Defi is built upon a public blockchain. Its code is transparent and open so that everyone can see it.

[avikz]

The open banking system will still be controlled by a central authority. Even though the data can be available throught whatever APIs but the infrastructure wlll be strictly centralized and drive by manua efforts.

On the other hand, the Defi is just a protocol or a piece of code. Once the Defi protocol is set up and deployed, it would not require manual intervention to operate. In a way, it is decentralized in nature but risky as well!

[Gozie51]

Data is the centre point to open banking and DeFi. Banks is third party extended
The DeFi is all coded and made public through the blockchain. So only when accessed, you can be privileged to it.

[zasad@]

Banking is very slow. If you need to transfer, for example, $ 10,000,000 from China to the United States, then it may take a week. The defi ecosystem allows for quick settlements between counterparties, regardless of countries, states and their laws. The same applies to other banking transactions that wait weeks for approval because the documents need to be reviewed. The DEFI ecosystem in 5 years will be able to replace the banking one if Ethereum increases the speed of transactions and reduces their cost.

[olabiyijummy02]

Open banking alludes to a financial framework where outsider budgetary specialist co-ops are given secure admittance to monetary information through APIs. ... DeFi, nonetheless, proposes a completely new budgetary framework that is autonomous of the current foundation.

[bigcash2011]

Open banking (or open banking) refers to a banking system where external financial service providers have secure access to financial data through APIs . This enables the creation of account and data networks between banks and non-bank financial institutions. Essentially, it enables new types of products and services within the traditional financial system.

However, DeFi produce a completely new financial system that is independent of the current infrastructure.

For example, open banking that are allow the management of all traditional financial instruments in a one  application by retrieving data from several banks and institutions in a secure way.

Decentralized finance, could allow the management of entirely new financial instruments and new ways of interacting with them.

Traditional banking basically have to be compliant and follow all rules and regulations of the state or central bank of the country they are operating as well as have to comply with international monetary rules as well that is why i think traditional banking is not that efficient, expensive and outdated.
Defi on the other hand is a concept that is borderless and without third party intervention and aimed for masses but we still have to wait an see a whole ecosystem in the defi that can compete the traditional banking.

[Cryptoababe]

First,
Open banking isnt open
DeFi is an open banking

2nd
DeFi is mostly transparent and decentralised
Open banking is not transparent Because its centralized and even if you are being cheated, you wont easily know

[hd49728]

There are both differences and similarities between DeFi and government-backed banking system.

Similarities:
- Hyperinflation. It is true for banks and DeFi. Banks, they print. DeFi projets: by yielding, farming, staking.
- True intrinsic value will be fallen over time.
- Banks and DeFi projects require people to lock their money into bank system or DeFi pools to get passive rewards.

Differences
- Infinite total supply. It is true for banks only. Central banks can print as many fiats as they want.
- The longevity of DeFi projects can be much shorter than of banks.

[Coroline]

- The longevity of DeFi projects can be much shorter than of banks.

DeFi is indeed very promising for those who want to find the hype and then get out. There is no guarantee that DeFi will last longer than banking systems which although we all know they are centralized but we still feel comfortable with them.
As long as decentralization cannot provide a sense of security and convenient services, centralized companies are still our choice.

[amishmanish]

Good to see some discussion on concepts in the Altcoin section. Keep it up OP and you may have merit coming your way sooner than later. You have already defined Open Banking as a system to provide interactions between different bank accounts. That is little more than combining the databases of all existing banks.

DeFi was supposed to be about Decentralized Finance. When people say Finance, as opposed to banking, what they refer to are these complex, risk-weighted investment strategies that can get confusing for a normal person. This is the reason that "normal" people traditionally don't go into these "investments" or don't care about it. This is the financial illiteracy part of it.

DeFi in its present form is only the platform. The platform needs liquidity, exchanges, Market making, lending, borrowing and leverage such that you can enable trading in derivatives. Even though you may have the 'platform', what you need for these to work is real investors and real products. That is where this DeFi hype fizzles out because of the rampant scamming and people's tendency to fall for them. Still, information travels fast these days and with the bullrun of BTC, these anon devs, unheard of APYs and rug-pulls will all vanish. The serious set of builders will only survive but the people putting money in are now just your traditional financial moguls who are way smarter than your average bounty hunter or a forum follower like myself. That does not mean that your average guy cannot take part in it. Its just that you need a lot of personal effort to manage that money.

The best way to describe Defi is from some VP I read on the internet, "Traditional investment managers wouldn't even talk to you until you have 10,000$. With DeFi, some guy with 50$ can play the same game".

Just remember that you are essentially playing the "game". Its a game in the gamble sense as well as in the "game theoretical" sense of knowing how other people holding same investment will react and finding ways to benefit from it. Ultimately, all markets are a game of sentiment and information. The traders and investors invest millions and make millions. You can now invest "hundreds" and hope to make back "hundreds". The problem is too many people hoping to invest hundreds in the hope of making thousands. Those people are just giving away free money to the real market makers.

[Kong Hey Pakboy]

- The longevity of DeFi projects can be much shorter than of banks.

DeFi is indeed very promising for those who want to find the hype and then get out. There is no guarantee that DeFi will last longer than banking systems which although we all know they are centralized but we still feel comfortable with them.
As long as decentralization cannot provide a sense of security and convenient services, centralized companies are still our choice.

You have a good point. Decentralized Finance are very promising because we use it as a bank for cryptocurrencies, but it will not exist longer than banks even it is much faster and convenient because it is not authorized by the government, and not all people are not familiar with it and would accept cryptocurrency as a medium of exchange.

[amishmanish]

- The longevity of DeFi projects can be much shorter than of banks.

DeFi is indeed very promising for those who want to find the hype and then get out. There is no guarantee that DeFi will last longer than banking systems which although we all know they are centralized but we still feel comfortable with them.
As long as decentralization cannot provide a sense of security and convenient services, centralized companies are still our choice.

The scary part about not just DeFi but Decentralization in general is that there is no guarantee that public "governance" can indeed be better. In fact, if you look closely at most of these projects, they are essentially turning out to be "Vote by wallet" systems. All of these need voluntary contributions or "investors". Some people have way more money to fund than others. In case contribution cap is introduces, people just use multiple wallets. The last way to do it then remains KYC, which then breaks the whole point of being DeFi.

There definitely are ways in which this can be solved but it needs a much better form of centralized launch from the devs and initial investors than most are willing to do. Its becoming more and more like capitalism vs socialism. Capitalism fares much better in creating value.

[Daras]

Open banking refers to a banking system where third-party financial service providers are given secure access to financial data through APIs. ... DeFi, however, proposes an entirely new financial system that is independent of the current infrastructure.

[irixo10]

As the name goes, open banking, it means many things comes to play, now bearing in mind how traditional banking systems works, same can be said about open banking, therefore it means that data or rather financial data is shared when need be, users have no control over their data and the team behind that platform can decide a lot of things based on their understanding. However in Defi, which stands for Decentralized Finance, it means financial data is restricted to the users, that is, they can control their assets the way they want while accountability, trust and transparency are also achieved.
Also, open banking is highly centralized and there can be data breaches while in DeFi, it is highly Decentralized because it is based on blockchain where immutability of the blockchain ensures data manipulation isn't possible.

[CaVO32]

- The longevity of DeFi projects can be much shorter than of banks.

DeFi is indeed very promising for those who want to find the hype and then get out. There is no guarantee that DeFi will last longer than banking systems which although we all know they are centralized but we still feel comfortable with them.
As long as decentralization cannot provide a sense of security and convenient services, centralized companies are still our choice.

The longevity of DeFi is really not a guarantee. Once this hype is over, are we going to expect that most of these DeFi projects are still in business? I don't think so. I am certain most of them will die on its own. And that is worrying if you invest in any of them. This is the reason why traditional banking will not be replaced very soon. The trust that they will not disappear is always there. That is the major advantage of traditional banks, they are not going anywhere unless they filed for bankruptcy but you can still get your money. However, from these DeFis, how sure are you that you can really get your money back plus profits?