In five years, financial data and payment initiations will be so mainstream, it doesn’t make sense to talk about ‘fintechs’ anymore, says Rune Mai, co-founder of Nordic API Gateway, which delivers the infrastructure that makes it possible.
Before ‘Open Banking’ became a reality, startups were already talking about a future in which fintechs would take bites of traditional banks’ business. Banks would lose their monopoly on financial data, the handling of accounts and even bank transfers. Nordic API Gateway is one of the companies making that transition possible.
“Financial data is one of the last silos. It has been protected by regulation – even banks couldn’t make use of it for new services. Now the silo is being broken down, and the market liberalised so that new services can be made for users. All kinds of companies will qualify to use the data, and our goal has always been to become the infrastructure that makes data flow as quickly and safely from A to B as possible,” says Rune Mai, CEO and co-founder of Nordic API Gateway.
The solution from Nordic API Gateway has already been integrated with the majority of banks in the Nordics. In that way, companies get one aggregated access point to bank data and transactions on behalf of their customers. This access point can then be used to streamline, automate and create new business models. Many companies from other industries are already interested in that access.
Financial data heightens the user experience
Jyske Bank, Danske Bank and DNB from Norway are already customers of Nordic API Gateway. The scaleup has grown from 18 to 46 employees this year alone. More large banks are about to become customers. In addition, Nordic API Gateway is striking a deal with companies from a long list of other industries. These companies are interested in obtaining access to the banking infrastructure.
“It’s not because we have stopped focusing on financial companies; in parallel, we’ve focused on looking into other industries where the access offers a value-add. This can be ERP or accounting systems that can automate 90-95 per cent of their balancing by getting access to free-flowing data,” Mai says.
All Danish accounting solutions for SMEs are already using Nordic API Gateway. In addition, lenders are eyeing the aggregated access point to improve their credit score algorithms.
”Instead of basing credit score on rules of thumb, loan-givers can get a more accurate picture of the lenders’ economy. This might make the difference when first-time buyers are applying for a car or home loan, so these new solutions have the potential to make a big impact for consumers,” Mai says.
Fintech will disappear because it’s everywhere
Companies that don’t immediately seem connected to financial data are currently trying to figure out how to benefit from Nordic API Gateway.
“Financial data is an obvious opportunity for retailers to build loyalty programs. If you can track amounts and number of purchases in the store, you can measure churn – and start giving personalised offers and rewards for shopping,” Mai says. He adds that the company is already working with a large retailer on a proof-of-concept.
Access to bank data and payment initiations have the potential to both minimise costs and create new possibilities. Housing administrations, crowdfunding platforms and payment gateways are looking into the possibilities. This has led Nordic API Gateway to take on a more active role in communicating the opportunities across industries.
”Most are surprised when we show them what payment initiation from account to account can do for them. Some are nearly falling off their chairs. The opportunities for monetisation and convenience are huge,” he says.
For that reason, the co-founder believes that fintech as we understand it today will disappear in the immediate future.
“In five years, it will be mainstream to use account information, just like it’s mainstream to use data from a wealth of other sources today.
There will still be ‘deep fintechs’ working on core-banking or financial AI, but those companies using only account data or payment initiations won’t qualify as fintechs. The FSI will become incredibly busy because soon they will have to serve everyone,” he says.