Referral based partnerships will become more common for financial institutions while in other industries, the need to automate all operations and key processes will take center stage. Vladimir Pintea, Head of Open Banking Gateway at Salt Edge shares some thoughts in this quick chat:
Vladimir, we’d love to hear more about the Salt Edge platform…
Salt Edge is specialised in building open banking API solutions that empower businesses to create smart services for their customers. We work with various types of businesses, including lenders, accounting softwares, and banks globally.
Our activity is focused on two vectors: enabling third parties to get access to bank channels via a unified gateway, regardless of their API standards, and developing the technology necessary for banks to become compliant with the PSD2 and Open Banking requirements. Salt Edge has already connected to over 5.000 banks worldwide, providing real-time account information and enabling payment initiation directly from the bank accounts. This is only the beginning…
Tell us more about your recent partnership with Forward Advances (and similar others)?
Forward Advances is a revenue-based finance solution that provides growth capital for startups, which need to bolster their marketing efforts. Partnering up with Forward Advances makes us feel honoured to support such businesses in, streamlining their processes and digitalising most of the workflow. Besides the obvious advantages, like excluding bureaucracy from the process and understanding customers’ needs better, the lending platform has now access to actionable insights on potential and existing clients, based on real-time bank data aggregation. It helps to improve the credit score assessment, eliminating fraud – in a matter of minutes. The final result of these procedures is what matters the most: Forward Advances customers will now be able to acquire additional funding for their development and other needs, much faster and simpler.
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How are you seeing the bank-fintech partnership model across the globe play out, as more providers strengthen partnerships to meet user needs?
I believe that when clients get the opportunity to access better services, with faster response time, and a simple-to-use digital platform, they will leave their current provider and go for more beneficial offerings. And this in spite of the fact that they would like to stay with you.
They’ve spent, nay they’ve invested in this relationship just like you have, to establish and build trust and loyalty – the pinnings of a strong business relationship. Partnering with fintechs helps banks retain customers and continue to grow the bond of trust. There are 3 models of partnerships that can be considered when looking for a fintech partner.
- Referral-based partnership – With this model-type, banks can earn a commission for referring customers to their fintech partner. So if your institution does not have the resources to invest in managing a new offering, this model may be what you’re looking for.
- Assisted private-label partnership – A very common partnership model where both banks and their fintech partner bear responsibility and control over the customer experience. At the end of the day, your institution gets all of the benefits from fintech’s technology without having to do all of the work.
- Private-label partnership – Banks can purchase the fintech solution, customise it and sell it to its customers. Your customers will most probably never see the fintech company’s name anywhere on the product. You can bring online a bank-branded product keeping a seamless experience for your customers. There are, however, more internal resources required from the bank’s sales, marketing, and support departments.
You have to ask yourself, which model is right for your institution? Assess your current resources: staff, collateral, time and determine which model best suits the bank’s needs.
One thing is for certain; our future is one that will be constantly evolving and providing customers with the services they desire will be more necessary than ever before.
Can you share a few thoughts from the global marketplace on the top partnerships you’ve seen changing the game for users and the industry?
I believe that all partnerships have game-changing potential, especially since we are talking about a breakthrough in the manner in which things used to be done. However, being open to the opportunities that fintech brings results in great ideas. Take Zeeco, for example, a New Zealand fintech, which developed an app that connects to users’ bank accounts and calculates the carbon footprint of everyday purchases. Users are able to offset the emissions automatically by supporting global reforestation. Zeeco partnered with Salt Edge for securely and automatically aggregating users’ data. I’m happy that this partnership not only solved Zeeco’s challenge but also directly contributes to raising ecological awareness and helps the world move toward a more sustainable and greener future.
Another partnership worth mentioning, in this case, is the one between Deskera and Salt Edge. Deskera is a Singapore-based SaaS company that helps businesses transit to a digitalised workflow with accounting, CRM, payroll, inventory, taxes, and financial documentation. The pandemic has changed the world a lot and all businesses should adapt to the new game rules, otherwise, they will fail, sooner or later. Seeing how Deskera’s customers benefit from the ability to connect to hundreds of banks instantly and enjoy a faster and more secure work process is a genuine accomplishment.
We’d love to hear your thoughts on how you feel open banking systems and solutions are helping providers across industries change how they offer services to customers with better integrations?
The open banking solutions couldn’t have come at a better time than the one we’re living in. Just look at how COVID-19 changed the entire world’s paradigm and literally forced us to learn to function differently. The financial sector is going through rapid development, with companies launching simpler and more accessible services. All these new opportunities trigger price-competitive responses from the market’s players, starting with banks and ending with third-party providers (TPPs). And who is the ultimate beneficiary of all these processes? The end-user, of course. All the innovative solutions target to decentralise formerly-centralised services, like the management of one’s financial data coming from various accounts open in various banks, first-hand insights on financial behaviour, and offers adjustments to that spending pattern.
Shifting from conservative banking services to innovative ones is crucial for overall banks’ business success. Account data aggregation and payment initiation are just two of the services that TPPs can now bring to the table. They now have a free pass to creating interactive interfaces for end-users, blending financial products with other types of services: rental, freelance, accounting, create new analytical products and the list can continue infinitely.
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How do you feel the future of banking solutions will shape up to look like?
Open banking solutions, in spite of their numerous accomplishments so far, have yet some development to go through. Take a look at the PSD2 directive – it refers to payment accounts only, while leaving out other types of accounts. On the other hand, in Australia, open banking ensures access to reading all financial data but is not yet supporting payment initiation. Where’s the fun in open banking without this feature? Same PSD2 with one more unpleasant limitation: users must go through authorisation and authentication procedures every 90 days. For each connected bank.
Therefore, nowadays’ banking solutions will grow from open banking to open finance. Why? Because being open means solving challenges, and open banking manages to solve lots of them while raising others. We must move forward. Constantly. This is the only way to achieve the goals we’ve set for ourselves.
Seeing how the year 2020 changed the game for fintechs due to the pandemic, more so tech startups, what are your thoughts?
Long story short, it is obvious that offline businesses are no longer a viable option. Making decisions from the comfort of your own home is imperative, and B2B and B2C interactions should take seconds nowadays, not hours like they used to. The new rhythm, overlaid by the pandemic, enabled SMEs and startups to be more agile than big companies and corporations have ever been. Partnering up with these businesses has become a wise decision.
Before we wrap up, a few biggest learnings and tips you’d like to share with fintech innovators and leaders?
- Do not be afraid to innovate!
- Take challenges as opportunities!
- Find key partnerships to go to market even faster
- Educate your customers
- Automate operations
- Leverage open banking and existing regulations to overcome excessive charges and overcomplicated processes
- Build simple solutions for complex problems
- Use Salt Edge solutions to ensure all of the above!
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Salt Edge is specialised in building open banking API solutions that empower businesses to create smart services for their customers. The company has two main vectors of activity:
- Enabling third parties to get access to bank channels via a unified gateway, and
- Developing the technology necessary for banks to become compliant with the directive’s requirements.
ISO 27001 certified and AISP licensed under PSD2, the company employs the highest international security measures to ensure stable and reliable connections between financial institutions and their customers. The company is integrated with 5000+ financial institutions in 50+ countries.
Vladimir Pintea is the Head of Open Banking Gateway at Salt Edge