Finqware – Consuming Data and Creating Value with Open Banking

The second Payment Service Directive (PSD2) and the concept of “Open APIs” initially shook the traditional banking system at its launch in 2015. The concept of allowing client data to “escape” the secure premises of the bank was hard to accept for many in the traditional banking system. Today, according to FT Partners latest research on Open Banking, 8 out of 10 financial institutions are adopting or plan to adopt Open Banking and the total Open Banking sector revenues by 2022 are estimated at $9.9B.

Banks have overcome their initial reluctance about data sharing to foster new use cases and pave the way for collaboration, creating financial ecosystems that nurture fertile grounds for fintechs. Open Banking innovation is built on Application Programming Interfaces (APIs) that also play a critical role in Raiffeisen Bank International’s (RBI) mission to “transform continuous innovation into superior customer experience”. As an example, RBI has launched its API Marketplace and is constantly introducing new APIs in its sandbox environment such as the recently launched Location API, which provides detailed information about the geolocation of Raiffeisen Bank business outlets and ATMs.

Central and Eastern Europe (CEE) is home to 80m banking customers, 11,000 large companies and 350 banks. According to the CEE Fintech Atlas 2019, the Open Banking market and the widespread adaptation of PSD2 in CEE still lags behind Western European markets, in particular the UK or Scandinavia. Market leaders such as Tink, Plaid and TrueLayer center their focus on the Western European markets and have not entered CEE. The lack of attention by top players, the divided landscape and nascent Open Banking market in CEE makes locality and local expertise winning factors of the implementation of Open Banking in CEE. (see Finqware’s blog post for more details).

Despite the local differences in implementation of PSD2, the European Banking Association (EBA) has released an Opinion in February 2021 to ensure banks remove any remaining obstacles that prevent third party providers from accessing payment accounts. Hence, the scrutiny of regulators on banks regarding their compliance can be expected to increase in the short-term. Finqware leveraged the opportunity and offers a compliance product (FinqMonitor) that reports directly to the national Central Banks using automated API calls. FinqMonitor was first implemented by Alpha Bank, one of the early Open Banking adapters in Romania.

Finqware understood that banks need to act proactively on the Open Banking developments and knows how to support them. Cosmin Cosma, founder and CEO of Finqware, summarizes:

In its guide to the Best Open Banking Platforms in 2021, consulting firm Altitude highlights Finqware’s Open Banking vision and its company’s agility. In comparison with larger players such as SAP, Plaid, Oracle and others, the guide categorizes them as “Open Banking Visionaries”.

Finqware’s flagship product, FinqOneAPI, enables banks to consume open banking data from a plethora of banks in CEE via a simple API integration. The company showcased its ability to execute in several customer implementations. On the consumer side, NeoBt, the digital banking app of Banca Transilvania in Romania, is powered by Finqware and made multi-banking available to its digital customers in their mobile application for the first time in the Romanian market. Just recently, Romanian CEC bank launched a similar service with Finqware. The company has already proven its ability to deploy its infrastructure within 2–4 weeks to gain access to >80% of the financial data of a new market. And it will continue to do so in more and more markets in 2021.

Furthermore, Finqware is developing Account to Account (A2A) payment initiation on its FinqOneAPI infrastructure. A2A payments via Open Banking enable Finqware’s future customers to send and receive millions of euros for a fraction of the classical 2% payment processing fee. Visa’s acquisition of Tink pinpoints the fear of missing out by even the world’s largest participants of the global payment supply chain.

The general trend on the market is that existing aggregators are developing value-add services such as analytics-as-a-service, cash management solutions, income verification and credit scoring for loans, and many more. Faced with this trend, Cosmin states:

Aggregation and normalization of financial data allow banks to optimize processes such as risk management and cross-currency settlements. Additionally, bank account data can be used to improve credit decisions. Finqware began a proof-of-concept (POC) project for income verification with OTP Banka in Croatia and achieved 90% market coverage in Croatia in only six weeks of implementation time. The next step on Finqware’s journey will be to serve non-bank corporate customers and enable them to ease their treasury management and financial steering. FinqTreasury, a solution currently in testing with Finqware’s international blue-chip customers, will provide the most effective solution for connecting corporate ERPs to their banks.

Cosmin Cosma is a success-hungry founder with a charismatic personality who thrives in a competitive environment. He has gathered an outstanding team around him with the technical skillset and experience in banking combined with the right “can-do” mentality. Finqware’s vision to put “Open Banking at Work” convinced Raiffeisen Bank Romania to choose Finqware as the 2018 Elevator Lab winner. With our investment, we are thrilled to be on board of Finqware’s journey to become the go-to Open Banking partner for financial institutions, businesses and fintechs alike. The company not only builds the data railway with FinqOneAPI for Open Banking in CEE but also develops value-added services such as cash management with FinqTreasury. The overall goal uniting Finqware with its clients is to make financial decisions more accurate and create financial convenience for the end customers.