Why European Banks Can't Stop Talking About Open APIs

Not a long time ago, one of the many technology conferences in Europe – Phoenix Conference – was held in Prague. It is interesting in the fact that it explores the potential of financial technology in the emerging markets of Central and Eastern Europe. Banks from all over the region showed serious interest in the event even though financial institutions of the Czech Republic, Austria, Poland and Turkey were dominating at that point in time.

The common theme on the first day of the conference was the issue of innovation – the models of organizational implementation and related problems. One of the key drivers, in addition to changing customer preferences and appearance of new FinTech companies for all financial and technological ecosystem, is the European directive PSD2. Under this directive, banks will be obliged to open the APIs and their infrastructure to third-party developers.

The representatives of Czech Erste Bank speculated about the introduction of this legislative initiative. They believe that in the near future, banks will be divided into two parts. The first part will continue to provide standard banking services, which will cease to be marginal for the banks in the near future. For example, the opening of accounts, conducting settlement and cash services, etc. The second part would deal with acquisition and customer service, where the focus is profit. Erste was insistently trying to demonstrate innovation in the field of open APIs to outside developers and even made a rap/hip-hop ad. It’s up to your taste. Have you seen it? I have and now, I can’t seem to forget it as well.

The process of organizational adaptation has become a key theme of speeches. Turkish bank Yapi Kredi and the Polish Alior Bank dedicated their speeches to adapt to the new conditions. The fourth-largest plastic card issuer in Turkey, Yapi Kredi, talked about why it reflected on changes in the development and promotion of domestic projects. Once the company even came up with the proposal to authenticate clients through selfies in the mobile bank application; the project failed to get the approval of the legal department and security department. However, after a while, MasterCard made it happen and Yapi Kredi decided that it did not want to miss such solutions anymore.

Yapi Kredi demonstrated a few interesting cases. For example, FinTech Istanbul – the cooperation platform for banks and financial technology companies – was based on the association of card-issuing bank BKM in Turkey. The Apsiyon startup has run within the framework of technological cooperation of banks and FinTech startups. It provides a SAAS solution for housing management companies. Besides that, the FinTech Istanbul Bounty application was conceived. Anyone can become a 'mystery shopper' by using it.

Alior Bank has more innovations in its fundamental approach. The audience listened with special attention to this company's presentation. Alior was started in some attic in Krakow in 2008. The bank has already managed to hold an IPO on the Warsaw Stock Exchange, has attracted 3 million customers and has built the fourth-largest sales network in the country. The bank has allocated a fully independent innovation lab department dedicated to new FinTech developments, with an independent budget and submission directly to the chairman of the board. The department is developing pilot projects with agile methodologies that are required to be expeditiously implemented in the bank if they succeed. The bank has projects with Uber, including lending company drivers at reduced interest rates and with Voice PIN, which was also presenting at the conference. Because of the implementation of voice biometrics, Alior reported a decrease in the cost of recovery, 6.5 times to be exact.

The second day of the Phoenix Conference was devoted to pitching of FinTech startups. I presented AmmoPay, a service developed and launched in the framework of ID Finance in August last year. AmmoPay is an automatic online service of POS lending which allows buyers to arrange installments for a variety of goods in the store through a mobile application. The project combines disruptive financial technologies in online lending with the traditional offline shopping experience.

AmmoPay integrates directly with retail cashier software 1C:Retail, which is used in 60,000 retail sales points in Russia. Besides, it supports mPOS-lending services. The target partners of the service are retail stores in the segments of non-electronic products (clothes, shoes, beauty) with an average client check of up to $1,000. Despite a short period of operation, AmmoPay has connected over 1,500 stores. In the medium term, we plan to develop this project in Europe.

I have also provisionally identified two groups of FinTech startups pitching at the conference and have highlighted the most interesting players.


On the second day of the conference, what caught my attention were Savedo and Raisin. Both players deal with the transfer of funds of depositors in Germany, the Netherlands and the UK in Eastern Europe banks that offer higher rates on deposits. These startups provide customers with a simplified process of bank checks when opening accounts within the European banking directive. At the same time, deposits are covered by public insurance. We have already started negotiations with these companies on the financing of ID Finance subsidiaries, operating under the brand "MoneyMan" in Spain and Poland.


A whole group of startups presented voice and video biometrics solutions. It was the Polish VoicePIN which grabbed my attention in particular. The company offers audio biometrics in order to optimize access to mobile applications and reduce the cost of customer service through their authentication in the contact center. A company called Qafis presented its services as well. The startup offers a full cycle of biometrics, including facial recognition, fingerprint, eye for any clients including public institutions, government agencies, banks and finance, health care companies, etc.


For tech banks present at the Phoenix Conference, changes in the relations of traditional financial institutions clients are obvious. Amazon, Facebook and Uber were mentioned as potential threats in almost every bank representative’s speech. Erste, Alior, YapiKredi and other banks are willing to change processes to develop and implement better customer service, trying to integrate into the agenda; in general, they are determined to meet the challenges of the time. Open-minded banks are already in a constant search for new solutions. They are ready to work with FinTech companies through M&As or partnerships. But neither the banks themselves nor the young ambitious startups are ready to predict the industry's development even three years ahead.