Vantage: Tink

We interviewed Tink, Europe’s leading open banking platform that enables banks, FinTechs and startups to develop data-driven financial services

Tell us more about Tink! What makes your vision unique?

Tink is Europe’s leading open banking platform that enables banks, FinTechs and start-ups to build smart digital financial services for their end-users. This is done by allowing our customers to fetch data from over 2,500 banks in Europe — that reach 250 million European bank customers — and build personal customer experiences on top of this.

Our mission is to enable data-driven financial services that delight both our customers and our customers’ customers. Tink has been paving the way for more customer-centric financial services since it was founded in 2012 by our CEO Daniel Kjellén and CTO Fredrik Hedberg. By enabling our customers to access financial data on behalf of their customers, we allow them to focus on the development of their core business idea, bringing their vision to life, and ultimately creating better experiences. We do this by removing all of the complexity and providing seamless authentication (and consent) flows for customers of practically any bank in Europe, with just one line of code.

 

2019 was a busy year for Tink, including high-value funding rounds, expansions and partnerships with the likes of PayPal and NatWest. What can we expect from Tink in 2020?

I think we’re just getting started! In January alone we made three major announcements. We first announced that we closed a €90 million funding round, which we will use to sustain our growth in Europe and help us further evolve our offerings. In the second announcement, less than a week later, we shared that we entered into a strategic partnership with BNP Paribas in Europe — building on the existing collaboration with BNP Paribas Fortis in Belgium, and will soon go live with the bank’s Italian network known as Banca Nazionale del Lavoro. The third major announcement from January was that the Tink Platform is now officially live in France. This means that over 4,600 developers on the Tink Platform can now start building services for the French market.

Looking at the months ahead, it’s clear that the PSD2 saga isn’t over yet. However, we’re not going to wait for the dust to settle. We’re committed to living up to our promise in making sure that we provide the tools to empower our customers to start building the future of financial services whether the APIs are ready or not.

 

Partnerships with banks are integral to Tink’s success. What are the main challenges of working with incumbent players? How do you overcome these?

My personal opinion is that innovation does not come easy to large financial institutions. The operating model has been optimized like clockwork around fixed processes and parameters. These institutions are frequently audited, manage huge amounts of capital, and typically serve thousands, if not millions of customers; they have enormous responsibility on their shoulders.

For Tink, this means that we’ve had to mature as a company much faster than most start-ups. We have had to get a banking licence issued by the Swedish FSA, set up a support organisation with extremely stringent Service Level Agreements (SLAs), and source the best talent in the industry to process all of the legal and technical requirements to deploy new technology at scale.

 

Tink’s partnership with NatWest made the news recently, resulting in the launch of NatWest’s personal finance management feature. What makes this feature unique? And what other features do you think are integral to a state-of-the-art mobile banking app?

Few people outside Sweden know this, but Tink was originally founded as a consumer app in Sweden. During our years as a consumer company, we’ve learned that the future of mobile banking is not a features game, it’s an engagement game.

Today our Personal Finance Management (PFM) technology aims to help users understand their finances, empower them to make smarter decisions and, ultimately, achieve financial happiness. We do this by providing our customers the tools to quickly build intuitive, personalised and visually engaging customer experiences.

When it comes to PFM there is no one-size-fits-all solution. The relationship between a bank and its customers rests on a foundation of trust and therefore the PFM experience should too. Ultimately, it’s all about having the users’ best interest at heart and building from that starting point.

 

While many industry players have implemented open banking features and apps, the progress of open banking has been slower than many expected. What do you think has led to this? And what do you think is necessary for open banking to reach its full potential?

The sceptics are saying that the progress has been slow, but I don’t necessarily agree. It is true that the quality of PSD2 APIs has not been as good as many hoped. In fact, in September we had to conclude that none of the PSD2 APIs that Tink integrated checked off all of the requirements outlined in the regulations. Now, in 2020, we still find significant deficits from a technical and user experience perspective. However, these shortcomings should be considered temporary, as the industry is successfully working together to develop exciting new use cases that will deliver value to customers in extraordinary ways.

There is evidence of this success everywhere. According to the European Banking Authority’s Payment Institutions Register, over 183 companies have been granted a licence to perform account information services and/or payment initiation services in 2019; Tink’s platform is now counting over 4,600 registered developers, up by more than 200% year-over-year, and we’re seeing open banking use cases emerge for every phase of the customer journey — from onboarding to support.

So, from my perspective, I think we’ve already made impressive leaps, but I’ll admit that there’s still an amazing opportunity ahead of us. I often say that open banking is a 20-year industry transformation. I personally believe that regulations such as PSD2 — when fully implemented — will provide a more than adequate framework to enable banks, licenced TPPs, and other stakeholders to deliver enhanced financial, and increasingly non-financial, services.

 

The past few years have seen the consumerisation of B2B banking services, as business account holders are continually having their expectations raised by their experience as consumers. To what extent do you think Open Banking will disrupt the B2B space going forward, and what particular applications do you see as candidates for this?

Most people will probably encounter open banking technologies for the first time as consumers when using multi-banking PFM apps. However, in the B2B space, businesses across all industries have been using account aggregation for many years.

Before PSD2, most enterprise financial management software vendors enable business customers to gain a consolidated view over their finances. But after the strong customer authentication (SCA) regulations were enforced on September 14, 2019, a lot of the existing connections broke and now businesses are anxiously looking for new mechanisms for creating a single overview. Over the next 12 months, we expect to see more-and-more businesses move over to open banking platforms such as Tink to fully benefit from recent enhancements.

More importantly, seeing the innovation in the B2C space, businesses will start to demand more intelligent services from their banks and service providers. Specifically, with open banking, there are opportunities to improve invoicing, cash management, tax optimization, and capital risk. The chief financial officers and treasurers of the future will expect higher levels of automation, lower costs, and more direct control over business operations through open banking.

 

The banking space is becoming increasingly competitive, with incumbent banks, FinTechs and most recently BigTechs all vying for market share. What role do you foresee for these types of players in the banking ecosystem of the future?

Like many other industries, the financial services industry is currently going through a digital transformation. By now, most large banks are trying hard to become more digital, agile, and innovative. I don’t think there is a single bank in the world that thinks that the future of, for example, customer onboarding is going to be in a branch office. They know it will be online, on an app, and at the leisure of the customer.  However, these banks also have a large number of traditional customers that continue to rely on predictable and familiar practices. These contradicting forces, the investments in compliance, product and service innovation, and change management, and the current monetary policy enforced by the ECB is putting immense pressure on operating margins for some of the largest banks in the world. And honestly, this is one of my personal concerns because history shows that when a bank stumbles, so does the economy.

Some banks will try to solve this problem alone, but the smart ones will take advantage of the ecosystem. This is why I think roles for FinTechs, BigTechs, and financial institutions are going to be increasingly symbiotic. When thinking about BigTechs, some have indeed announced partnerships with banks to launch financial services. However, they themselves have no interest in being as heavily regulated as the banks. When thinking about FinTechs, some may be looking to take a piece of the pie (e.g. challenger banks, alternative finance lenders, payment institutions), but most operate alongside the banks by complimenting or even augmenting their existing offerings.

This is Tink’s position as well, we aim to empower banks — as well as some of the other creative FinTechs in the market — to build the future of financial services. Ultimately, powered by open banking technologies, I imagine that this ecosystem will continue to grow and stretch into every other industry we know.

 

What are some key trends that you expect to see in 2020? How will Tink look to take advantage of these?

There are several things that will define 2020. Firstly, we expect to see a plethora of customer-focused use cases going beyond simple ‘money management’. Think easy onboarding portals, personalised financial dashboards, embedded payments, instant loans, and bespoke financial services. I think that applying machine learning and artificial intelligence (AI) to open banking data is going to be pivotal here.

Second, I also foresee banks shifting their focus from an investment perspective. Many of the discussions in 2019 were around ‘exposing APIs’ for the sake of compliance, providing other players with a window into your company’s data. This year, we expect to see banks step up as TPPs (Third Party Providers), looking at ‘consuming’ other providers’ APIs in order to enhance or augment their existing financial services, operations, and digital interfaces.

Finally, we’ll see several incumbent banks in Europe trying out the marketplace model as we have seen with Starling in the UK. From being a closed shop, offering only their own set of products and services, to a marketplace, offering a range of products from other banks and TPPs to their customers.

Our opportunity is to provide the rails and brains of open banking. In other words, the infrastructure to access data and initiate payments, and the tools to enable our customers to build competitive data-driven services. We believe that any business that can provide value should be able to access financial data with the customer’s consent, enabling them to leverage the power of technology to offer great products.


Jan van Vonno
Research Director

Jan van Vonno spearheads Tink’s research and thought leadership program. Founded in Stockholm in 2012, Tink is Europe’s leading open banking platform that enables banks, fintechs and startups to develop data-driven financial services. Tink’s customers include companies PayPal, NatWest, ABN AMRO, BNP Paribas Fortis, Klarna, and many others. Jan is responsible for the strategic positioning of Tink within the context of open banking and Tink’s outbound communication and content. Jan worked most of his career for the International Data Corporation (IDC). During his time at IDC, he covered various technology and business topic as the head of the European digital transformation research program.