The sea change that is afoot in financial services is drawing a bead on APIs, as a new Citi report notes. Patents filings are grabbing headlines in the US, while open banking has traction in Europe, with a few firms targeting services for micro businesses.
The movement of banks to join FinTech firms and stanch the disruption of their business models — decades and centuries old— has been well-documented. As banks embrace technology in ways that are both novel and, perhaps, permanent, observers have noted that the shift toward APIs is gaining momentum.
A recent report that bowed via Citi underscores that thesis, as Global Market Manager of the bank’s Channel Services division, Rene Schuurman, wrote that 87 percent of banks have a clear API strategy in place. That strategy is helping transform B2B commerce, amid other corridors of transactions. The shift also comes as sandboxes are proving to be effective avenues by which the companies and their FinTech partners are able to test those same APIs before live deployment.
The Citi research also shows that, amid those initiatives, the FinTech investment space notched $200 million in just one June week, which comes even as deal volume swelled last year. Even despite the uncertainties of Brexit, the U.K. has seen a quadrupling of deals to $3.4 billion last year.
In an interview with PYMNTS, in tandem with the latest B2B API Tracker, Schuurman said the overarching theme is “you build something, take it apart and build something new.” The banks, said Schuurman, are adopting a DIY approach and want to speed up the API pace. The API approach for Schuurman’s own bank is one where Citi can sidestep sending “big email attachments” as APIs are developed.
In light of the movement toward a faster API development pace, it is perhaps no surprise that Barclays was reported, last week, to have filed two patent applications in the U.S. One is geared toward consumers registering for crypto accounts, the other is for know your customer (KYC) processes. The Barclays activity, of course, follows news that American Express filed a patent of its own, which would focus on blockchain proof-of-payment technology.
Turning back to activity beyond U.S. shores, London-based startup TrueLayer, which offers a developer platform that helps FinTech firms access bank APIs, has gained $7.5 million in financing, and comes on the heels of $3 million garnered last year. The efforts dovetail with PSD2 and Open Banking.
In an interview, the TrueLayer’s Co-founder Francesco Simoneschi said, “The first quarters of 2018 have been about working and educating companies on Open Banking and how to build propositions on top of it. This has seen a silent, yet massive, stream of inbound demand for us. To put things in context, we grew 500 percent in terms of the developer community averaging hundreds of companies a month asking how to start using TrueLayer and the services that we enable — from two people in a garage to the largest enterprise.”
Separately, also in Europe, FinLeap — which is noted by Crowdfund Insider as the FinTech behind the German bank solarisBank — is working with Fabrick, the Italian Open Banking platform that will launch a new financial management startup focusing on small businesses. The firms will simplify accounting, tax and other services for the smallest of firms in the region. The startup is to be named Beesy, the companies said earlier this week.
In Asia, specifically in Singapore, the lender UOB has made its second FinTech investment this year. The company has both invested in and partnered with Personetics, an Israeli firm, with an eye on artificial intelligence (AI). As reported by finews.asia, the Singaporean firm wants to gain insight into transaction volume, with an eye on Southeast Asia. Terms of the deal were not disclosed.
The previous transaction was a joint venture with Avatec.ai in April. That deal uses AI in credit decisioning,
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More