Accessibility of banking services have been admitted for all people
as one of the priority tasks together with education, access to
information and clean water. The telecommunication infrastructure is
very unequally developed in the world, so banking has its own
characteristic features in different countries. For example, the
African M-Pesa became the first case, when a completely non-banking
organization started providing banking services. And all because of
non-traditional service access.
This example shows that there is no need in banks with traditional
format of service, as itself. Banks are needed as a back office,
anyone can have working relations with client and current trends
have proven it.
Banks have realized that visiting a financial institution for a
client, as a whole, is sometimes rather unpleasant experience, so
they tried to use all the time latest telecommunication solutions.
There is more than one altruism driven by banks - good remote
banking system can significantly reduce bank’s costs on support.
Firstly, it was SMS banking system, then web based internet banking,
then mobile banking, messenger banking, bots and so on.
All of these things have been created around us an interesting
hybrid of financial services and the latest technologies, an entire
industry, which is called Fintech.
Open Banking API
Today this industry is an undeniable driver in economic development.
But since 10 years ago, there have been some factors which are
hindering the rapid development of industry - Fintech startups stay
dependent on banks. If the bank didn’t want to integrate with
startup - the startup had no chance in building service.
In addition, the client also become dependent to the bank, which
issued him / her a payment card and opened an account, even if the
application didn’t satisfy client according to usability features or
quality. Or client cooperates with different banks - he / she has to
use several remote banking systems at the same time…
There was one possible way out of this situation - banks should have
an open protocol that would allow them to integrate with third-party
Realisation of the idea in the world
The idea of an open interface of data exchange in banks was
suggested by Germany in 2010. “Open bank project” is an initiative
supported by the largest banks in Germany, which provides mutual
exchange of data. This initiative is progressing and gives an
opportunity to create interesting non-bank financial projects today.
Subsequently, the idea began to be implemented in the UK - they also
began to create open banking APIs.
And since 2015, the EU has accepted the PSD2 directive, which
regulates the bank’s access to client’s database and software
interfaces for exchanging data with third parties. The directive
came into force in January 2018, according to it, all banks should
meet the directive’s conditions until mid-September, 2019: on the
first stage, banks should provide developers with the test
environment, and give the full access on the second stage. And
despite the fact that most banks don’t meet the deadline - the
process is going on and soon we will be able to observe the creation
of interesting European startups.
There are similar initiatives around the world, if it is not on the
government level, then on the level of private business initiatives.
For example, in the USA, despite the absence of such an initiative
from the government, there is a MINT aggregator. There are also
initiatives in Singapore, India, and Russia for creating such open
Ukraine, as an associate member of the EU, also has accepted the
PSD2 directive in 2019. According to that, the wave of new startups
will not bypass its territory.
And what’s next? And then, the EU will implement PSD3 directive and
anyone who doesn’t get into this process will stay on the wayside of
financial flows and in the deep niches, where no retail and small
business has gone before :)
So, what are the opportunities will provide an Open API in the
First of all, what we are waiting for is forgot about impression
“bank client XXX”. Preferably, the client will have access to
payment instruments of all banks from one application, and the
client becomes just a user of the financial application from which
he or she will manage accounts from several banks.
Second, is a significant increase of competitive activity between
banks and financial startups, that will compete for user’s attention
/ loyalty of their applications. Most likely, there will be an
interesting situation, where banks will build up loyalty programs
with unique services in their applications and non-bank startups
will use offers variety from other banks and partner programs.
Third. Clients who have already been logged in, their personal data
will be used by other members of the system, such as banks and
non-banking systems. This will allow users don’t pass identification
every time, when they decided to purchase a service.
Fourth. Previous innovations will automatically bring to result in a
situation where banking services will be sold as a prepaid mobile
phone provider package, quickly and in a single click. For example,
you will have an opportunity to make a deposit in any bank by
purchasing a prepaid deposit card for a certain amount.
It is impossible to predict all consequences or evolution of
Fintech, we can only confirm that fact, that culture of consumption
of financial services will be significantly changed and modernized.
What is client expectations?
The fact of the matter is that banking services is not simple. For
that reason visiting banks is not really pleasant procedure for
ordinary people, the same as banks by themselves. The best for
people to know nothing and steer clear of all these difficulties.
People would like to get all these services as quickly as possible,
without extra time and energy.
Here rather than elsewhere came into play Fintech. Everyday
technologies give us opportunities to simplify our financial
Client says: “I don’t want to go to the bank,” We say - “Choose
services remotely by web, mobile”.
Client says: “I would like to get a unsecured loan quickly”, we say
- “Please, use our instant online credit systems”.
Client says: “I don't want to pay extra attention and control my
expenses, but I would like to avoid extra expenses”, we say “Please,
use our financial management system with AI”.
Client says: “I don’t want to install all bank applications, where I
have a card or bank account”, we say - “Please, install our generic
app and manage all your bank cards there..”
Open API allows us to improve the quality of financial services,
their accessibility and usability.
Why are we bringing up this topic?
Our Codein Sofware team, specify Fintech as one of the industries,
where we have extensive experience and understanding of business
component. We have more than 13 years of experience in banking
systems, we’ve participated in implementation of digital banking
systems at several banks, participated in the development of several
non-banking payment systems and integrated banking APIs, PCI DSS
implementation and compliance, also, many other solved tasks, which
gave us a right to identify ourselves as professionals in this area.
Confirmation of our professional approach and ability to develop
such systems are our successful cases and, in particular, our rating
on the Clutch
If you have any ideas concerning the development of interesting
financial service, we are ready to help you! Let’s start our
cooperation with a free consultation, where we can help you to
choose the right technology, architecture, and stages of system
development and implementation. This will help you to save a good
part of the budget, and you can spend this money on further
implementing of additional functionality or marketing.