It may be an open road for open banking as, three years after the rollout of the second Payment Services Directive (PSD2), bank-FinTech collaborations and new initiatives unlocking bank account data continue to flourish.
But it may not always be smooth sailing ahead. The Financial Stability Board this month issued a warning for financial institutions (FIs) that outsource key technologies and functions, warning of “systemic risk” associated with too much reliance on a third-party partner.
Even so, as this week’s exploration of bank-FinTech collaborations and open banking initiatives reveals, opportunities to add new revenue streams, improve product offerings and enhance the end-user experience are too promising to ignore. This roundup includes new initiatives from Visa and Lloyds, among others, to drive innovation in the small business, corporate banking and finserv arena.
Visa Launches FinTech Collaboration Initiative In Europe
This week, Visa revealed the rollout of its Visa Fintech Partner Connect initiative in Europe, an effort aimed to connect FIs and merchants with a range of new financial technologies and capabilities via FinTech partners. FinTech partners include small business credit risk analysis company AccountScore and small business data company Codat. Mark Nelsen, Visa’s senior vice president of Europe Product, said in a statement, “Financial institutions and businesses of all sizes are looking for ways to rapidly develop their offerings,” and FinTech collaborations are instrumental in developing those next-generation solutions.
Lloyds, Demica Collab On Supply Chain Finance
Lloyds Bank Commercial Banking is teaming up with FinTech Demica to introduce a new supply chain financing platform for joint U.K. business customers, the FIs revealed. Dubbed The Open Account Platform, the portal will facilitate supplier and accounts receivable (AR) financing with a streamlined, digital onboarding process that can connect businesses to capital in 48 hours or less. Straight-through processing accelerates the movements of funds to businesses’ accounts, the companies noted, adding that the solution will go live before year’s end.
Poland’s mBank Taps Treasury Pricing FinTech
Poland’s first fully-digital bank, mBank, is collaborating with kACE to integrate the FinTech’s treasury pricing technology. The bank will implement kACE Treasury’s foreign exchange pricing and distribution capabilities through its own eCommerce platform, noting that the technology will integrate directly into mBank’s existing treasury systems. In a statement, kACE Managing Director Richard Brunt said investment in its treasury technologies has risen to focus on “the openness of its APIs to allow for seamless publishing to downstream systems and eCommerce platforms.”
ThinCats Links Up With Open Banking FinTech Salt Edge
Traditional lenders aren’t the only ones embracing FinTech collaborations. In the U.K., alternative lender ThinCats revealed a partnership with open banking company Salt Edge, which will facilitate enhanced credit assessment and loan monitoring made possible via open banking-powered data integrations. In a statement, ThinCats Head of Analytics Gareth Rumsey said, “Given the high volume of cash flow-backed loans that we fund, open banking has a key role to play in helping us support creditworthy, but asset-light businesses…”
Vasile Valcov, vice president of Salt Edge, spoke with PYMNTS earlier this month about the opportunities that open banking presents in the business banking and financial services arena. The company rolled out a capability to connect multiple bank accounts and consolidate that data for businesses that operate across borders, allowing chief financial officers and finance executives to gain a streamlined view of cash positions in real time. Other emerging use cases of open banking in the B2B landscape surround the regulatory framework’s payment initiation function, which enables bank-to-bank transaction initiation from directly within third-party applications.