When talking about industry collaboration overall, but moreover as 2023 debuted, banks and FIs looking to tackle digital transformation found themselves in the position to do so with the help of fintechs and other participants of the financial ecosystem in order to maintain their relevance.
A Sopra Banking Software (SBS) report entitled Digital Banking Experience (DBX) Report, issued in partnership with Forrester and IPSOS highlights that although traditional banks still hold most consumer accounts, 77% feel the pressure for fintech collaboration. The findings showcase that 76% believe fintech collaboration to bring forth opportunities that outweigh the threat, with the benefits cited including revenue growth, improved customer loyalty, decreased time to market, and better customer experience. Additionally, 65% of respondent banks confirmed a preference for third-party collaboration in building new technology instead of doing so themselves, and 74% agree that the ‘as-a-service’ approach is to become the business model of the future.
Throughout Q1 2023, the partnerships within the fintech space as covered by The Paypers showcased a predominant inclination of banks and FIs towards Open Banking, which keeps on redefining the paradigm of the relationship between banks, fintechs, retailers, and end-consumers. We have analysed the collaborations regionally and included two other sections that focus on:
In the European space, several companies showcased notable affinity towards Open Banking-related cooperations, with the use cases ranging from bettering credit lending processes to enabling variable recurring payments (VRPs).
One of the first partnerships announced in January 2023 in the region was that of crypto P2P lending platform Credefi with Experian, a credit bureau that collects and researches credit information on individuals to rate their debt repayment ability. The collaboration had the goal to broaden the former’s reach and access to institutional-grade clients, together with improving the Open Banking system and integrating improved fintech APIs. Additionally, Credefi became Experian’s official partner and mediator for the provision of Green Company scoring to all firms applying for a loan via their platform. Looking to further better the credit lending space, Experian partnered with Zopa Bank in February, following which Experian Boost data was integrated into Zopa Bank’s credit card decision process to better the customer experience with improved rates and providing them with reduced APR services for a fixed period. Furthermore, customers were enabled to leverage Open Banking to connect to Experian Boost for the voluntary addition of real-time relevant information and data to take control of their credit scores.
Open Banking’s use cases in the context of VRPs were showcased by a multitude of companies, with a notable mention being the partnership between Open Banking provider TrueLayer and UK-based credit management app Incredible to enable automated recurring debt payments by leveraging TrueLayer’s VRPs. Continuing its foray into the debt payments space, TrueLayer collaborated with SuperFi, a UK-based debt detection and prevention app, to provide its Open Banking VRPs to assist customers with burrowing and avoiding fees by enabling automatic fund transfers of varying amounts on a recurring basis. A separate instance of VRPs usage within the context of loan repayment was highlighted by the collaboration between ethical lender Plend and Open Banking provider GoCardless, where Plend leveraged VRPs alongside GoCardless Direct Debit to provide customers with more payment choices.
When talking about the European ecommerce space and Open Banking’s applications, the digital A2A transactions platform Trustly made public two separate collaborations, one with payment orchestration platform APEXX Global to provide merchants with recurring payments, and one with booking platform Bokadirekt, where it enabled the company to provide its traders and merchants with instant payout services for expedited and increasingly efficient revenue collection from their clients.
Within the context of expanding Open Banking use cases, Netherlands-based banking corporation ING partnered with Canada-based Open Banking solutions provider Salt Edge, looking to support a new range of such cases for SME segments from various industries, corporate, and individual end-users.
Moving away from Open Banking to digitalisation initiatives within the fintech European space, a collaboration between five associations towards the formation of a UK Forum for Digital Currencies (FDC) was announced early in January, which aims to innovate the payments industry. With participant members including the City of London Corporation, Digital Pound Foundation, The Payments Association, TheCityUK, and UK Finance, the alliance has the goal to develop improved policies, practices, and regulations related to digital currencies.
Two noteworthy collaborations aimed at helping expand the fintech ecosystem were the one between Visa and the Fintech District which was set to facilitate said growth in Italy, and one between Santander and Salesforce, where the latter’s technology was leveraged to power the Santander Navigator, a digital platform designed to assist UK-based businesses with their international expansion.
Q1 2023 kicked off in North America with several collaborations around Open Banking, together with digitalisation initiatives within the fintech industry.
Reiterating first on Open Banking partnerships, noteworthy cooperations were those of Mastercard with white-label embedded financial platform upSWOT for the addition of Open Banking capabilities to the latter’s platform to enable SMBs to link owner-permissioned financial data to 200 API-enabled apps, and with financial institution Citizens, where Mastercard became the exclusive payments network across its credit, debit, and commercial portfolios and its US services provider. What is more, challenger bank NorthOne joined The Clearing House’s real-time payment network in partnership with The Bancorp Bank, thus enabling its business clients to receive instant payments. Fintech Payjunction integrated the A2A bank connectivity technology of the Open Banking platform Plaid to simplify ACH enrolment, reduce fraud, and save money.
In an aim to help accelerate Open Finance initiatives and adoption of OAuth (industry-standard protocol for authorisation that enables users with control over how their data is shared) and APIs to exchange data with third parties, Plaid partnered with identity provider Okta. The decision for said collaboration followed a 2022 Plaid survey with Harris Poll which showcased that 75% of US-based consumers believe the ability to connect bank accounts with digital finance apps and services to be important, as such connectivity enables simplified and secure data exchanges. Shortly after, Plaid formed a separate collaboration with fintech Mission Lane, providing its Open Finance API data connectivity solution, looking to enable Mission Lane’s customers with access to digital payments and financial planning and investment tools.
A partnership made public in February was that of Canada-based Open Banking solutions provider Salt Edge and software company Mooncascade to support PSD2 compliance, as well as the improvement of user experience, security, and Open Banking through the development and provision of solutions targeting FIs and fintechs to help them better address the needs of their customers.
The North American space also saw Open Banking applications in separate verticals, as January kicked off with the news of ecommerce company BigCommerce partnering with A2A payments platform Vyne to provide such payment capabilities to its online clients. Marking the first step for the company within the Open Banking field, the collaboration enables BigCommerce to offer merchants, customers, and users the option to accept instant payments and carry out real-time refunds, while saving as much as 80% per transaction. In the US, instant payments were introduced within the gaming industry following a partnership between fintech Trustly, embedded financial solutions provider Cross River, and online gaming operator PointsBet.
When talking about digitisation initiatives, be those related to B2B lending/payments, or banking, the region saw several developments. Two of those were announcements centring B2B financial marketplace Fiserv, one with BNY Mellon for the expansion of real-time FX rate quotes for payments from US-based financial institutions, and one with BaaS provider Central Payments to provide modern issuing capabilities to fintech companies and FIs, integrating its services into Central Payments’ Open CP Fintech API Marketplace.
January kicked off with a multitude of collaborations related to Open Banking/A2A payments, with Australia being among the first regions announcing their plans in expediting the adoption of such strategies within the financial space together with other verticals.
In 2019, the Australian government introduced the CDR legislation (Consumer Data Right) to enable consumers with increased control over their personal data by providing choice over who would receive said data and how it should be used. In 2020, the CDR was introduced within the banking industry, with the energy sector following shortly after. Due to the region’s strong focus on practical use cases of Open Banking in different verticals, in January 2022, it was announced that CDR was expanded to the telecommunication sector, with the news at the time detailing future expansion plans into Open Finance.
Within this context, early in January 2023, mortgage aggregator Finsure partnered with Open Banking provider Frollo and lending technology provider NextGen to enable access for its brokers to the Open Banking-powered Financial Passport, to gather customer data for use in the loan application process and reduce the time they spend on reconciliation and processing applications.
When talking about participants in the energy sector in Australia, providers such as AGL Energy formed a collaboration with Microsoft to launch a cloud-powered data platform that would enable it to offer consumers CDR services and scale to accommodate an anticipated increase in the number of consumers wanting to share energy data and compare deals within the CDR ecosystem. Furthermore, should the energy provider wish to become an accredited data recipient (ADR), the solution would enable it to discover growth opportunities such as recruiting more customers and providing customers with personalised services like ML and AI capabilities for bill forecasting, management, and smoothing, together with data integrations with Open Banking and suggestions on more efficient energy usage.
In February 2023, multinational data analytics and consumer credit reporting company Experian partnered with Envestnet | Yodlee, following which the latter became its Open Data API provider in Australia. Experian was enabled to integrate the APIs needed to access data from data holders under the CDR. Being a global Open Banking services provider, Experian’s Open Banking strategy in Australia has a focus on providing accurate affordability assessments, looking to help lenders make informed lending decisions at scale.
Within the lending space, the region saw a similar collaboration that leveraged AI and data insights for bettering B2B lending, that of bank Westpac and Rich Data Co (RDC), which introduced capabilities such as a digital application process, smarter technology for expedited decisions for borrowers, and an expanded cash flow offering. Working towards digital transformation, Westpac partnered with Amazon Web Services (AWS) as it needed support for its hybrid cloud strategy, with the collaboration enabling it to provide digital-first experiences via technologies such as Conversational AI, Banking-as-a-Service, and a new transaction platform for institutional customers.
Two other notable collaborations within the Australian fintech space were those of Cuscal with Zai and American Express, both of which had the aim of further developing real-time payments within the region and bettering the PayTo and PayID offerings, which are initiatives of the New Payment Platform (NPP), managed by Australian Payments Plus (AP+), Australia’s domestic payments organisation.
A collaborative white paper between NatWest and NAB highlights that Open Banking and CDR are both critical parts of Australia’s digital and data economy design, as they are intended for the provision of a sustainable, robust, and resilient foundation for consumers and businesses to engage with and benefit from the data exchange and productivity increase it supports.
In Q1 2023, the African space was short-handed in terms of collaborations within the fintech space, with two of the most notable announcements having a focus on furthering financial inclusion. Within the banking sector, the Central Bank of Nigeria (CBN) and the Nigeria Inter-Bank Settlement Systems (NIBSS) partnered towards the launch of a national payment card with the aim to transform the domestic and African payment landscape.
With a goal to encourage increasingly inclusive financial services, Arab Financial Services (AFS) selected fintech Brankas as the provider for new Open Finance infrastructure within the Middle East and Africa. Following this collaboration, APIs were made available via the AFS platform to enable tech platforms to provide financial services such as credit scoring, payroll disbursement, account-to-account (A2A) payments, and new bank account openings.
In comparison, Asia saw more developments related not only to Open Banking and real-time payments strategies but to the digital transformation journey of banks and FIs as well. A worthy mention is a collaboration between Indonesia-based Open Finance API platform Ayoconnect and Mastercard, which had the goal of modernising bank account-based payments and co-creating Open Finance solutions in the country. Shanghai Commercial Bank made public a partnership with Salt Edge which helped it achieve Open Banking compliance and regulatory standards and apply PSD2 capabilities to Open Banking.
Open Banking’s applications were also sought after within the ecommerce space, showcased by the partnership between Singapore-based cross-border payments provider Tazapay and payments gateway Volt, following which the former announced the introduction of Open Banking to its payments stack. This addition followed Tazapay’s aim of enabling clients to extend and increase cross-border sales for APAC- and MENA-based merchants looking to expand and increase sales in the UK and Europe. Having added Volt’s real-time reconciliation capabilities, organisations were able to follow payments from inception to receipt, being provided with complete visibility of the payment value chain through data-driven insights and analytics. Another Singapore-based enterprise, the digitally native bank Trust Bank partnered with financial technology provider FIS to power real-time transactions through the integration of FIS’ Open Payments Framework (OPF), an ISO 20022 real-time payments platform.
Digital banking as a whole saw developments that had a focus on financial inclusion as well as the digitalisation of banks and FIs processes and offerings. In India, HDFC Bank showcased an expedited approach in trying to achieve digital transformation, as it announced two separate collaborations, one with Microsoft to leverage its Azure stack towards the consolidation and modernisation of its enterprise data landscape, amongst others, and one with Backbase, which was set to support it in the delivery of its vision for a digital banking experience in the country.
In the UAE, Q1 2023 saw the launch of a fintech accelerator campaign, brought forth through a collaboration between Emirates Islamic and Plug and Play Abu Dhabi, characterised by a call to action for Islamic fintechs and financial startups with propositions to enhance customer journeys across SME financing, trade finance, and financial wellbeing. The region saw a separate partnership between e-marketplace Tradeling and Mastercard, with a focus on supporting economic progress by assisting SMEs through a combination between Mastercard’s technology, products, resources, and network and Tradeling’s B2B services towards the development of an increasingly sustainable and inclusive digital economy.
When talking about the industry from a worldwide viewpoint, the collaborations announced throughout Q1 2023 ranged from automating accounting and furthering Open Banking usage to digitising banking processes.
In late January, the global payments platform for digital A2A transactions Trustly made public a partnership with Sweden-based platform for savings and investments, Nordnet to enable payins via Trustly throughout Nordic countries, even in markets that do not have instant payments available. The business payments market saw two collaborations that aimed to facilitate their improvement, one between GoCardless and automation company Zapier, set to automate the payment processes across over 5,000 apps on the latter’s platform, and one between financial services company Stripe and business platform Xero, to automate accounting for transactions and support SMBs across Australia, Canada, New Zealand, the UK, and the US.
When talking about B2B payments/lending initiatives, some other developments were those of fintech Froda, digital challenger bank Lunar and Visa, which partnered towards the delivery of an SME lending solution that would enable businesses to access financing for their growth initiatives. Leveraging push-payment functionality, the companies’ solution aims to have the transaction times decreased to seconds within a process that would otherwise take months.
In reference to worldwide digitalisation strategies, a notable announcement was that of payment service provider Worldline and ING Bank, where the former was selected as being the bank’s debit and card issuer and processor across multiple regions, to enable it to focus on its growth ambitions. Two other banks, namely BMO Financial and BNP Paribas, entered a commercial agreement and announced a cross-border framework that would help enhance coverage and access to a global network, and planned to offer vendor partners access to end-to-end asset financings services such as floorplan financing, point of sale, and vendor leasing solutions. Fintech enablement company FintechOS partnered with PwC to assist in developing a digital baking solution that would help FIs speed up their digital transformation initiatives, as it combines cloud-based technologies, fintech innovation, and industry insight and understanding, as well as experience across strategy, regulation, controls, and cybersecurity.
In our research, Volt and Finastra were the two names that stood out most when talking about collaborations within the fintech and banking sector, predominantly their foray into Open-Banking and digitalisation initiatives.
UK-based payment network Volt was amongst the companies that had collaborations which showcased the usage of Open Banking into separate verticals. Its first Q1 2023 partnership was the one with Germany-based software developer Xolvis, where its Open Banking payment method was integrated into the latter’s online payment gateway to enable the digitisation of the aftersales business of garages in the automotive, bike, and aviation sectors by offering them the option to receive real-time direct A2A payments.
Volt’s Open Banking real-time A2A transfers solution was also announced to be leveraged by UK-based not-for-profit organisation Sporting Chance Prize Draw towards the collection of donations from contributors, with an aim to accelerate the payments process for participants throughout the country.
A third collaboration marked Volt’s Open Banking solution applications within the crypto space when it partnered with cryptocurrency exchange Coinmama to support real-time crypto payments in Europe, as well as Brazil. At the time, the announcement detailed that Coinmama was set to leverage Volt’s Open Banking solution for A2A payments to improve the speed and ease of on-ramp and off-ramp experiences for its clients.
Being a global provider of financial software applications and marketplaces, Finastra provides companies no matter the size with solutions and services across different areas, such as lending, treasury, capital markets, retail, digital banking, commercial banking, and payments, looking to help banks support direct banking relationship and grow via channels of the likes of embedded finance and BaaS.
As part of its Q1 2023 strategy, the company partnered with Germany-based embedded finance provider XPAY to support its growth initiatives via its Fusion Essence product, which came pre-integrated with its payments’ gateways and Open Banking Compliance from Salt Edge, a global Open Banking pioneer. Blending functionality and technology, the digital banking solution helps increase business agility, cut costs, and boost operational effectiveness. The announcement was followed by a separate collaboration with Integro Technologies to provide digitalisation and exposure risk offerings for clients, namely its Trade Innovation solutions, alongside Integro’s SmartLender Trade Limits service.
Further showcasing its involvement in advancing Open Banking usage, Finastra teamed with Aspire Systems looking to enable FIs to not only transform their payment operations but also improve instant payment offerings. Due to Finastra's Payments To Go and Aspire Systems' implementation and system integration capabilities, customers were offered an end-to-end, multi-rail payment processing SaaS solution, accessible on Microsoft Azure, together with direct access to networks of the likes of the European Central Bank's TARGET Instant Payments Settlements (TIPS), the US real-time payments (RTP), FedNow, and SWIFT.
Within the context of the Fundamental Review of the Trading Book (FRTB) reporting requirements, effective 2025, which is a set of guidelines established by the Basel Committee on Banking Supervision (BCBS) that capital banks need to follow to protect themselves against market risk exposures, Finastra partnered Uni Systems to help FIs be compliant with it.
The Q1 2023 collaborations within the fintech space showcase a predilection towards leveraging modern payment technologies for modernising an enterprise’s offering, driving consumer growth alongside the expansion of services, and looking to ensure they remain competitive, while also addressing the consumer affinity towards digital experiences.
Although in the past banks and financial institutions have been reticent about partnering with fintechs, the movement taking place in 2023 highlights that this apprehension has begun to dissipate, due to the benefits found in API access, fintechs’ enablement to navigate strict regulations, immediate access to advanced tech, together with improved brand reputation.
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