One API for True Global Reach

Tony Crivelli
May 8, 2022

As Open Banking and open APIs become more widely utilised and adopted, there is even greater scope as to what this means for global business. The beauty of the open and secure API for the evolving landscape of financial services is within the network it can reach as borders and differing regulations are no longer a barrier to trade, information sharing and transactions. 

The Open API Landscape 

A new wave of services and products has already started taking place in the consumer space, however it is now slowly moving into the B2B arena making for easier payments without a compromise on security or the sectors it can reach. 

For example, last month, BNPL giant Klarna opened its open banking business division, Klarna Kosma, which links together 15,000 banks across 24 countries using just one API. Kosma gives financial institutions and fintechs alike the ability to build financial services apps and services more easily; Amsterdam-based Finom having already started on the platform serving freelancers and SMEs in France, Germany and Italy. 

In addition, last year, neobank Coconut stopped issuing business current accounts as part of its pivot to embrace open banking more fully. The new app will allow freelancers to track income, tax and claim expenses as it connects to over 25 banks and credit card providers to pull statements and transactions over the year. 

The SME’s Needs & Financial Institutions

In both cases, the collating of data from multiple banks and sources (such as invoice feeds) feeds the growing gig economy’s needs to run just as efficiently as a larger business. As the demand for flexible and agile working is skyrocketing, freelancers made up 36% of the US workforce in 2020 and figures are expected to increase to around 50% of the workforce by 2027. With such a boom, micro businesses and SMEs not only want but now require more solutions for business issues, like finance and risk management and payment solutions. 

While more support is needed to run similar to a larger business, the case of switching provider is a task that the SME owner or freelancer is unlikely to pursue because, again, their time can be better spent. For them, it’s far more attractive if their existing provider moves from closed proprietary payment networks to open ones, where they can simply add better, more relevant elements to their current set up. This is the foundation of open banking and APIs, and a key gateway for new, easy revenue streams for the incumbent financial institutions. 

For the bank or fintech, APIs remove the clunky and lengthy work to build a service from scratch, AB test it and deploy and maintain it. Instead, they offer faster time to market with a value add product without any of the leg work or specific expertise. Coconut’s move is a great example of understanding core offerings and providing greater access to better products that speak to an organisation’s strengths - not just their own but also the bank’s. 

What effortlessly comes into play next then is the embedded finance model that stitches together the data the API is calling in. Embedded finance meets the demand for a stronger and more seamless digital ecosystem that is seeping from B2C into B2B.

While many banks and financial institutions (FI) have embraced open banking and therefore open API technology, there is much further to go that will undoubtedly contribute to greater customer reach. As with restaurants and Uber Eats, having more embedded finance solutions within an FI will only increase visibility and, ultimately, access to their services and products. 

Banking and payment apps, like Stripe, that connect to communication platforms, such as Slack, bring together an effortlessly holistic business set up from the start for the tech-native smaller businesses. Crucially too, it remains open to further service integrations in the future helping to improve customer retention. It becomes an easy win-win scenario. 

Embedded Currency

While credit and loans for businesses are more frequently entering into the embedded finance arena for businesses, more can be made to benefit the SME and freelancer. 

For example, as physical borders no longer apply, it’s now more common to work on a global scale than a local one, whether through supplier, customer or both. Because of this, there is greater foreign trade than ever before and by default, a greater need for foreign currency. 

Fluenccy addresses this. It sits as an orchestration layer that offers better foreign currency experiences for the SME by embedding a critical step to financial institutions, fintechs and big tech companies who are looking for a competitive edge and additional offering to their customers. 

The simple embedded solution gives businesses a better understanding of their ongoing FX needs and helps towards a more rewarding experience and often, better rates for their business. 

Currency management can now be embedded into a network of thousands of banks across the EU, North America and Asia as part of the invoice management process, and even at point of payment. It takes away the lengthy process to speak to someone or to shop around for the best rate and gives a single page with one process, no matter who the currency provider is. 

Last Words

The introduction of the API offers global reach for financial services, and access to new segments, which can make for a fairer market - however its success is in the integration and the goal of the organisation on each end. 

To drive greater open API adoption, it’s worth remembering SMEs and micro businesses are the biggest contributors to the global economy, and are far more willing to selectively and securely share their data if it helps towards achieving a better deal. 

There is a big shift happening in this space already and as competition grows, like most step changes in technology, it’s wiser to be open to it than to get left behind. 

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