Jules van den Berg, Maxcode: "Fintech companies have the potential to change the way we pay"

From your point of view, what would be the three leading future trends for the Fintech industry?

Fintech is definitely a buzzword for 2016 and it will continue to be in the near future as well because Fintech companies have the potential to change the way we pay. This technology is becoming increasingly important in the world of financial services. According to consulting company Accenture, investments in financial tech are expected to reach USD 8 billion by 2018. Therefore, it is clear that many business opportunities lie ahead of us.

So far, blockchain has been one of the greatest outcomes of Fintech and banks as well as other companies that offer payment services considering adopting this technology will be one of the major trends in 2016. Blockchain acts as the ledger recording all information related to transactions that occur within its network. The decentralized database maintains a history of every exchange ever made and bases the trust on participants rather than centralized institutions. In the previous year, the obvious advantages of a decentralized public ledger have led traditional banks to try to jump on the blockchain bandwagon. Clearly, an increasing number of banks will also seize the opportunity as this disruptive technology is more efficient for conducting financial transactions, offering all sort of players outside the traditional centralized institutes the possibility to revamp their business model.

Authentication is something I also see as a defining factor for the months to come. Taking into account that KYC, e-identity, privacy and security are becoming essential pillars of a safe digital environment, I believe banks will continue to innovate in this area. They want to enhance customer experience by offering them the chance to prove their identity and authorize payments with one single click. This synergy between payments and identity is definitely something worth watching.

And since we’ve touched upon identity, currently there is a lot of debate on privacy and the possibility to make use (money) on this sort of information. There is a tendency to put privacy in the background and, in my opinion, only businesses that have smart ideas about personal user data and can be transparent about how they handle it stand a good chance.

Should banks and Fintech players join hands?

The Fintech wave brings a lot of opportunities for traditional financial institutions. I think banks will join hands with Fintech companies – we are already seeing a couple of such strategic partnerships. In order not to lose their position and be able to compete with a lot of new start-ups that are already trying to offer the same services, banks will have to adapt, deploy new technologies, innovate as much as possible. The alliance between banks and Fintech innovators will turn out to be highly beneficial for the industry because they complement each other. Traditional banks are trusted and provide consumers with a sense of stability, whereas Fintech companies can enhance the customers’ experience providing ease of use and seamless payments. Therefore, banks need to decide for themselves, either to stop providing payment-related services, compete or cooperate with Fintech providers. They could also try to acquire these Fintech businesses, but in the long run I do not see this as a sustainable business model.

What is the strategic impact of PSD2 ‘Access to account’ (XS2A)?

The PSD2 states that of January 2018 banks are required to provide payment account access to third-party providers (TPPs). This means that banks will have to provide two types of services, namely payment initiation services (PIS) and account information services (AIS). Both services require account holder consent and apply to all consumer and business payment accounts that are accessible online. As a result, two types of (licensed) TPPs can enter the market: payment initiation service providers (PISPs) and account information service providers (AISPs).

Since the services that are going to be offered by TPPs to bank’s account holders are built on the AIS and PIS offered by the bank, it is highly likely that they will somehow overlap with bank services offered in the present. This might lead to some implications for the way in which a customer sees and interacts with its bank. The impact of the XS2A requirement will be huge. In order to be able to remain competitive and increase innovation, banks should redefine their business model and add value to their services.

In the Netherlands, for instance, taking into account the four corner model for the payments chain, I believe that existing payment schemes iDEAL and iDIN can allow banks to already be compliant with the XS2A rule (or at least achieve it easily). The third-party that gets access to the account details and is able to initiate the payment can eventually be the merchant (webshop) itself. The same might be applicable for MyBank in Europe.

What is next on Maxcode’s roadmap for the coming years?

Currently, we are working on expanding our payment and identity services and products. We aim to introduce MyBank Merchant Connectors for service providers and merchants that plan to offer MyBank as a payment option to their customers. The modules allow for easy implementation and at the same time offer reliable and correct connection between the shop’s platform and the MyBank scheme.

Once XS2A is in place, Routing service software will be available allowing third-party providers (TPPs) and banks to offer the Routing service for iDIN, iDEAL, eMandates, MyBank, etc.

Also, Merchant Routing Modules will be able to connect the merchants directly with the issuer, eliminating the need for acquirers to be involved in the chain. This basically means that the four corner Dutch model could turn into a three-corner module.

So far, Maxcode has developed connectors for merchants on demand. Banks, service providers and merchants currently use this software to connect their platforms with online payment and identification schemes, like iDEAL, iDIN (BankID) and eMandates. This assures them of a reliable and correct implementation with ease of use.

About Jules van den Berg

Jules van den Berg has been working at Maxcode since the start. During his time in Maxcode he became more and more interested in Scrum as a framework for project approach and Radical Management and high degrees of autonomy for the organisation.

About Maxcode

Maxcode started as a typical near shoring IT services provider, meaning sales, project management and design were handled in the Netherlands while young IT professionals developed in Iasi, Romania. The following years, the company became an internationally-oriented organisation and a reliable business partner as a result of extensive IT expertise and years of experience. It provides software development for web and mobile, but also offers scalable architecture using cloud services and incorporating complex business processes.