Open Banking – making advantages visible

Christian Wolf, Head of Strategic Partnerships & Ecosystems in Raiffeisen Bank International (RBI), shares with our readers best practices on Open Banking, APIs, and innovation from RBI

Since mid-September 2019, when the European directive PSD2 came into force, banks in Europe are required to provide payment transaction data via Application Programming Interfaces (API) for third party providers. Consequently, bank customers should now be able to access and manage their accounts from different banks in one app. And banks, on the other hand, can consume APIs of other banks and therefore provide their customers not only with a comprehensive overview of their finances but also the convenience of initiating payments from all their accounts via one app. This could make banking a truly new experience. Also, an increase in competition amongst banks due to all the new possibilities thanks to Open Banking should substantially improve customer experience. After all, banks will work hard on finding the best solution for their clients with the chance of a market share increase in mind.

PSD2 facilitated the development of a new banking experience as embedding banking functionalities into third party providers’ applications, such as payment initiation, allows customers to perform some of the banking operations anywhere and anytime they wish to. Overall, the regulation led to increased competition in the industry as well as the introduction of numerous benefits for end consumers. However, the end consumer does by far not yet experience the full potential of Open Banking capabilities. There are still very few cases of banks or third-party providers that offer personalised products based on account information and payment providers still prefer card processors to direct payments enabled by corresponding APIs.

It can be expected that the European Banking Authority’s (EBA) Working Group on APIs, which consists of 30 members including third party and API providers, will further smooth the way to a higher acceptance and usage of Open Banking. In order to make the advantages of an established and standardised way of sharing sensitive customer data via APIs more visible, the working group leads and facilitates the exchange of information on PSD2. The latest material issued by the Working Group in January 2020 covers the testing and wider usage of APIs, the contingency measures, the performance of APIs, the use of eIDAS (EU directive on electronic IDentification, Authentication, and trust Services) certificates for PSD2 purposes and many other related topics.

Against this backdrop, I’m proud to say that Raiffeisen Bank International (RBI) is one of the first financial institutions to offer account aggregation services to customers in Slovakia. The solution was jointly developed by the RBI head office in Austria and the Slovakian subsidiary Tatra banka. As we at RBI are convinced that the future of banking is strongly connected to Open Banking by the means of APIs, we ensure an easy and comfortable first point of contact for potential partners: this is our RBI API Marketplace (https://api.rbinternational.com). It’s a one-stop shop featuring all our publicly available APIs because we want to allow interested parties to have a look at the range of available APIs and try them out in sandboxes, that provide testing data, as easily as possible. If they identify a potential use case for future cooperation, the Marketplace is the place where our partners get in touch with us, initiate promising collaborative projects and ultimately publish their products.

Banks and third-party providers are starting to realize that Open Banking is a perfect opportunity to connect and partner up. Most incumbent players in the financial industry initially considered fintechs as threatening disruptors but this has changed: first experiences that fintechs can be valuable partners for banks have been made. RBI has understood that a partnership with innovative and agile fintechs can support the development of highly customer-orientated solutions, also in the Open Banking area.

This is why our group-wide fintech partnership program Elevator Lab, which just started its fourth round, will search for Open Banking literate fintechs in the second half of 2020. The scanning and subsequent four-month program including the development of a pilot project is hosted by our Tatra banka. Other subsidiary banks have already begun searching at the end of May 2020: While in the past only RBI’s head office in Vienna looked for fintechs from all over the world, now our colleagues in Romania and Bulgaria are scanning the markets for fintechs with solutions in the fields of Advanced Analytics as well as customer loyalty programs. The head office in Vienna is searching for fintechs to help large companies integrate payment systems and use customer data more efficiently. And more RBI subsidiaries are to follow, all aiming at finding potential long-term partners – more than ten partners have already been found within the previous three rounds of Elevator Lab.

The importance of Open Banking also made us choose the topic as the focus of the second edition of our CEE Fintech Atlas which has just been be published (free copies under https://www.fintechatlas.com).

About Christian Wolf

Christian Wolf, as Head of Strategic Partnerships & Ecosystems in Raiffeisen Bank International AG (RBI), works on cross-industry co-innovation initiatives with a focus on strategic business model and market innovation. In this role, he and his team develop and run RBI’s Elevator Lab, CEE’s largest award-winning fintech partnership program. Beyond that, he takes responsibility for positioning RBI as a valuable ecosystem partner in cooperation with corporates, bigtechs and fintechs alike. Further, he and his team assume direct implementation responsibility for RBI’s Open Banking strategy and new business model development based on disruptive technologies such as Blockchain.

About Raiffeisen Bank International

Raiffeisen Bank International (RBI) regards Austria, where it is a leading corporate and investment bank, as well as Central and Eastern Europe (CEE) as its home market. 13 markets of the region are covered by subsidiary banks. Additionally, the RBI Group comprises numerous other financial service providers, for instance in leasing, asset management or M&A.