What are the lessons Klarna has learned along the way in the world of Open Banking?
Firstly, bank connectivity requires local market expertise and a steady hand at the wheel. There are many variations across current bank connectivity APIs, and here at Klarna, our 16 years of bank connection experience has proved time and again to be the backbone of our customers’ successes.
Secondly, the quality of bank APIs is diverse. API tech requires extensive testing, and as we ride the wave of transition towards PSD2 our team continuously provides feedback to banks and regulators, resulting in better APIs allowing our partners to provide superior products and services to their consumers.
That’s why we developed the Klarna Open Banking Customer Portal as an all-in-one tool that allows users to check status updates for every step of sessions (AIS) and transactions (PIS), along with statistics. Better yet, we continue pioneering by offering a unique service of automated Bank Onboarding for our partners.
For Account Holders, this means: Providing consent or initiating a payment is more likely to be accepted by account holders when done by a trusted provider.
For TPPs, this means: Combining several Open Banking providers can often result in inconsistencies and high maintenance costs. TPPs are naturally looking for one provider who can offer proven connectivity and performance while matching their ambitions to grow and expand.
How can fintechs and financial institutions leverage key financial data to provide new services and products using Open Banking?
By doing so, manual processes can be replaced by automated ones. This saves time for our partners, improves customer experience, and reduces manual errors.
What are the most exciting Open Banking use cases that can solve real-life customer problems?
The diversity of use cases and potential opportunities is unlimited. For example, with Personal Finance Management tools, Klarna Open Banking helps our partners improve their users’ financial wellness by strengthening banking experiences and making better decisions. With access to 3rd party bank account information, banks can provide personalised advisory services that ultimately lead to better customer retention and increased product upsell or cross-sell value.
How can smaller businesses and enterprises use key financial data and bank connectivity?
As Open Banking’s popularity grows, we notice more and more TPPs and corporations interested in joining Open Banking ecosystem platforms. That said, the greatest value of Open Banking doesn’t come from payments alone. It’s a combination of account insights and payments that create cost and time-saving opportunities for businesses.
Multi Banking – Businesses can review their accounts quicker and move their money between accounts with less time to manage individual banks and cards. Faster decision-making allows thriving businesses to protect their finances.
Everything under one roof – Large and small companies now have access to account information in one place, providing a clear view of the consumer's financial state (as well as their own).
Risk assessment – Assessing risk and providing credit has become easier, faster, and more precise thanks to quick and seamless consented access to key financial data.
Personalisation – Businesses can create tailored offerings based on actionable reports such as income, recurring expenses, balance over time, subscriptions, and so much more.
KYC – The power of connectivity and access to relevant data allows TPPs to get to confirm their customers' identity without having to ask an endless amount of questions at the onboarding stage.
In terms of next-level Open Banking: what do you see as key trends for 2021 and beyond and what can we expect from Klarna in that respect?
With Open Banking adoption on the rise, PSUs will begin to need more advanced consent management options to stay in control of data shared, with whom it’s shared, and for how long. At Klarna, we’re staunch believers that Account Holders need to be able to manage their consent at all times and from one easy-to-locate place.
We will also maintain our position of #1 coverage provider in and beyond the EU to meet our partners' ambitions to grow and expand geographically.
Our customers are requesting more ways to initiate payments. We are planning to add features such as future dates and bulk payments.
Many use cases would benefit from tapping into financial data which currently is not PSD2 regulated (e.g. credit card accounts, wallets or personal identifiable information).
We work with our partners and contribute to their business success by supporting them in their journey of discovering new use cases and turning their future vision into reality.
This article was originally published in The Paypers` Open Banking Report 2021.
About Philippe Rousseau
Philippe has almost ten years of experience in the payments industry. First, in Sofort where he was responsible for developing the BeNeFra region, and more recently at Klarna Open Banking where his customer knowledge has made him essential in the strategic planning of the Open Banking roadmap at Klarna.
About Klarna
We make shopping smooth. Klarna’s offering to consumers and retailers include payments, social shopping, and personal finances. Klarna is one of the most highly valued private fintechs globally with a valuation of USD 45.6 billion. Klarna was founded in 2005, has over 4,000 employees, and is active in 17 countries.
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