Like all new concepts, it may be challenging to get a grip on what Open Banking means. How would you explain it?
There are multiple definitions out there. I like to keep it simple and that open banking is about secure financial data sharing, based on the owner’s consent.
For instance, as a company, I need to share my banking data for real-time availability of balances and transactions in my reporting systems. Or, as a person, I need to be able to share my income history with a credit provider.
It sounds like businesses have a lot to gain by accessing more consumer data — but is Open Banking also good for consumers?
Finqware started with consumer use cases in mind and pivoted later on. Like any technology, it can be used for both consumers and companies. Both worlds need access to banking data.
One of the pivotal use cases for consumers that open banking leverages is the financial health of individuals. Gathering banking data from all the sources into a single App can help a person to understand where he is in terms of financial health. Is he in debt, can he afford one more credit card, how much can he put aside or invest – in short a better financial inclusion for the masses.
Data sharing and protection can and must go hand in hand – but is the market regulated enough to ensure the whole industry is on the right track?
Yes. The Open Banking data regulation provisions are not only very well thought but they are also implementing the mindshift that the GDPR started.
The customer data is not owned by the banks but by the customers and the banks need to provide adequate access to such data so that their customer can make the most out of it. This is what we are doing with FinqTreasury. We put their data to work through the open banking mechanisms to create value for their own business.
Talking about the Open Banking market, what is your positioning? Which products do you provide?
We started by building an aggregator for multiple consumer use cases. We pivoted to B2B when we understood the need of corporations for a real-time Cash Management solution.
Open Banking allows for real-time use of data. We already had our own proprietary middleware that allowed us to connect in real-time with any bank through Open Banking APIs. So, we just started to execute the plan of leveraging these two elements and in a couple of months we came up with FinqTreasury, the real-time cash management solution based on Open Banking. It covers all the transaction banking operations of a company: Cash management, Reconciliations, Audit & Reporting and Payments, Collection and also Payments Acceptance.
You recently expanded your business in the Benelux, with the opening of a new office in Luxembourg – why target such a region?
We chose to open our first international office right in the heart of the European Fintech World in Luxembourg as a pivotal point for expanding further to Benelux and Europe. Also, another reason was The LHoFT – Luxembourg House of Financial Technology. The supporting community we found here even before thinking of opening a foreign office (before pandemics) encouraged us to be where we are today, on the verge of being able to help finance teams to use a single real-time cash management solution across all countries.
Although it offers a wide range of benefits, Open Banking is not all about convenience though. According to you, which are the main challenges ahead?
You just struck one of the most important notes here. The convenience of accessing and using banking data is both the main benefit of Open Banking but also, still, it’s biggest challenge.
To explain, Finqware as a licensed third party provider is enabling its customers to easily access their banking data, while taking upon us the struggle in ensuring such convenience. We are still in the beginning of open banking and for a TPP & aggregator using banking APIs and banking data is not an easy job, yet. But it’s our job and that of all the others, the players in this industry, to make sure that data becomes available and usable. To answer your question to the point, there are 2 main challenges: the API performance and reliability and the lack of compliance standards, issues on which we work together with the regulators.