Here's why fintech is spreading to every sector
»In five years, financial data and payment initiations will be so mainstream that it doesn’t make sense to talk about ‘fintechs’ anymore, says our CEO, Rune Mai, in an article published in Business Insights. Read the full piece below and learn why fintech is spreading to every sector.
Before ‘Open Banking’ became a reality, startups were already talking about a future in which fintechs would take bites of traditional banks’ business. Banks would lose their monopoly on financial data, as well as the handling of accounts and bank transfers. Nordic API Gateway is one of the companies that makes that transition possible.
“Financial data is one of the last silos. It has been protected by regulation – banks couldn’t even make use of it for new services. Now, the silo is being broken down - and the market liberalised - so new services can be created. All kinds of companies will qualify to use the data, and our goal has always been to become the infrastructure that makes data flow fast and secure from A to B,” says Rune Mai, CEO, Nordic API Gateway.
Nordic API Gateway’s solution covers all banks across the Nordics. With that, companies get one aggregated access point to bank data and transaction details on behalf of their customers. That access point can be used to streamline, automate and create new business models. Many companies from other industries are already interested in that access.
Financial data heightens the user experience
Major banks such as Danske Bank, DNB and OP Financial Group are already customers of Nordic API Gateway. The scaleup has grown from 18 to 55 employees last year alone. And there’s a good reason for that, explains Rune Mai:
“We’re looking into other industries where access to financial data offers added value. ERP or accounting systems that can automate 90-95 percent of their balancing by getting access to free-flowing data,” Rune Mai says.
Most Danish accounting solutions for SMEs are already using Nordic API Gateway. In addition, lenders are eyeing the aggregated access point to improve their credit score algorithms.
”Instead of basing credit score on rules of thumb, loan-givers can get a more accurate picture of the lenders’ financial situation. This might make the difference when first-time buyers are applying for a car or mortgage. Therefore, these new solutions have the potential to make a big impact for consumers,” Rune Mai explains.
Fintech will disappear because it's everywhere
Companies that don’t immediately seem connected to financial data are currently trying to figure out how to benefit from Nordic API Gateway.
“Financial data is an obvious opportunity for retailers to build loyalty programs. If you can track amounts and number of purchases in the store, you can measure churn – and start giving personalised offers and rewards for shopping,” Rune Mai says.
He adds that the company is already working with a large retailer on a proof-of-concept. Access to bank data and payment initiations have the potential to both minimise costs and create new possibilities. Housing administrations, crowd-funding platforms and payment gateways are looking into the possibilities. This has led Nordic API Gateway to take on a more active role in communicating the opportunities across industries.
”Most are surprised when we show them what account-to-account payment can do for them. The opportunities for monetisation and convenience are huge,” he says.
For that reason, Rune Mai believes that fintech - as we understand it today - will disappear in the immediate future:
“In five years, it will be mainstream to use account information, just like it’s mainstream to use data from a wealth of other sources today. There will still be ‘deep fintechs’ working on core-banking or financial AI, but companies using account data or payment initiations only won’t qualify as fintechs. The FSI will become incredibly busy because they will have to serve everyone soon,” he concludes.
Curious to explore how your business can benefit from seamless payments and access to real-time data? Reach out to our team or get started today in our sandbox.