TPPs: The time is now!

The last couple of years there was hardly any professional day for me without a discussion about PSD2 and Open Banking. And when I analyse all these discussions, the biggest time was invested in talks about the pressure on banks to open up. Of course this is a crucial part of PSD2 and is / will be very challenging for many players.

However, as PSD2 implementation is only a few months – and not years anymore – away, TPPs (third party provider; companies accessing bank accounts) that do not have any license yet (mostly FinTech startups) should start thinking about their strategy around PSD2. I have understood that most of them “ignored” this as these young companies had other more urgent issues. Nevertheless, if a TPP has started XS2A operation after January 2016, then they will require to have license by April 2018. And April 2018 is – even for startups – that not far away anymore.

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Banks and FinTech startups: Just an affair?

Since all of us have started to use the word FinTech, the industry has seen a few changes already. In total, we can see three waves of FinTech development (see also my Slideshare of 2016 about this development):

Wave #1: FinTech startups attack (2009 – 2014): Mainly due to changed regulation, better technology and cheaper costs to found a startup.

Wave #2: Banks fight back (2014 – 2015): Banks recognised the threat of FinTech startups and decided to compete with FinTech startups on their level (“FinTech killer”)

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FinAsia Day in Hamburg

In November the second FinTech Week will be happening in Hamburg/Germany. Last year’s edition was a great success, combining all different FinTech events of the second half of the year into one week. Resulting in a concentrated week of discussions, networking and learning. Last year the figo team had organised a Bankathon within FinTech Week 2016 and this year I will be personally supporting one event day which will focus on FinTech from the other side of the world: we call it #FinAsia.

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Granting access to your bank account

Last week PwC in Germany published a survey where the majority answered they would grant a third party access to their bank account. Exactly 2/3 said they would consider doing so and the remaining 33% stated that there is no scenario where they would do so.

Among the people who are considering granting access their willingness depends on account protection (38%), data safety and privacy (34%), added value from third party (21%), who is the third party (19%), price advantages (17%) or convenience (11%). Willingness to share credentials with third party providers is highly depending on the age. Taking only the respondents below the age of 30 in consideration, the willingness to use third party providers increases from 67% to 86%.

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Why banking needs more innovative regulation

The European Union is turning Europe into a playing field for FinTech entrepreneurs. In the post PSD2 world any accredited third party provider will be able to access the data of payment accounts whenever the owner of the account has granted the right to do so. Banking is in many ways an old fashioned industry, but the complete neglect of doing anything else with financial data that storing was surprising – to say the least. Other industries were growing vital thanks to exploiting such data sources, however, banks and other incumbents decided to not only to forego the opportunity to make use of them but also to limit access for others. Which is somehow proving, that banks know about the true value of financial data but at the same time declaring that oneself is not able to harness it, and thus, no one should. More entry barriers and protection were welcomed to make it even more complicated for outside players to enter the industry. The classical story of protectionism.

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Bankathon 2017

Until today we have organised four Bankathons and it all started in April 2015. For the second half of 2017 we are planning another two events, in Amsterdam and Berlin. Additionally, there are more and more other FinTech hackathons which are mostly organised banks. This is quite a high selection for FinTech developers to choose from when he/she is considering attending a FinTech hackathon.

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XS2A: Access to Answers

Currently, Europe is being seen as the role model for Open Banking. Incumbents like banks are obliged to open up and provide access to the data of their customers. A trend which might have happened even without a regulatory requirement as well, but definitely a lot slower (yes even slower than the development of PSD2…). In the years after PSD2 it is likely that other financial accounts will be opened up by banks for third parties as well. But is connectivity to these financial accounts the only barrier which is avoiding innovation from happening in this industry? I believe that opening up is one step, but probably an even more important one is to increase quality of our financial data.

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Services I love to pay for

Today is a little off-topic, since I am writing about tools I use every day and not specifically about FinTech.

At the end of my studies I signed up for Xing (German version of LinkedIn) premium. As many other people in the same situation, this was a helpful tool to connect to others in order to find the right job since the basic version has lots of limitations. However, since then I am a premium member but advantages were rather little for me since usage of LinkedIn was anyway predominant. Now I have finally lapsed my subscription and feel quite happy not to pay the 90 EUR per year for a service I don’t actually use.

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Attraction of uncertainty?

Since 2013 I am reading FinTech news on a – more or less-  daily basis and tweet about it. Twitter was a good way to find new interesting articles but also discuss them with a diverse audience. The interest in FinTech started at the end of my studies when I was wondering if joining a bank is actually the only option with my background. Thanks to an internship at a VC & SumUp, an innovation / entrepreneurship focused MSc degree and finally joining figo – all of this has deepen my consumption of FinTech news.

When I was going through the news of the last weeks to find a topic to write a blog post about I couldn’t really find a relevant one. When I finally went to my tweets of this week I came to realisation: most of my reading activity during the last weeks was much more about Blockchain and Cryptocurrencies than “traditional FinTech” – which was usually the case. Blockchain has been part of my reading since a few years but was always just one topic of many and other topics such as Open Banking and APIs has been dominating. In the past weeks this has changed, which is why I have deleted a few FinTech sources in my Feedly and replaced them with Blockchain focused ones.

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Guess who’s back, back again…

One of the most important thing for being successful in anything from sports to learning a new skill: Consistency. Something I have been lacking a lot in this blog here. It has been more than two and a half months since I’ve published my last blog post. Last blog post in mid April and today is already beginning of July. So I have missed my own goal of one blog post per week pretty badly. That is something I cannot undo but aiming to become consistent again and live up to my self-set goal.

The reason for being so quiet? Many things from “being busy in life” to my honeymoon trip. And as so often missing the deadline once makes it a lot easier to do it again. And again. That’s why being consistent can be hard 😉   Continue reading