Globally, open banking has greatly increased the availability of APIs in finance. This is realized by fintech to enable banks to offer new products and services. However, to date, only a small number of innovative business models and products have been developed in each country. Banks need greater access to a wide range of product APIs and new approaches to partnership relationships, while fintechs need to focus more on meeting needs in specific target markets to take advantage of emerging opportunities.

But how can banks serve their customers even better with the help of open banking? One way is to let their customers’ bank accounts actually make money, even when interest rates are negative. This can positively affect the financial well-being of bank account holders and offset bank costs. Cake was founded precisely to make banking profitable again; a fintech that is making their technology available in more European countries.

“Open banking makes it incredibly easy to implement Cake’s cashback platform and create added value for new and existing customers – as well as for the bank itself,” said Davy Kestens, co-founder and CEO at Cake. “Account holders can view cashback and personalized offers from affiliated retailers.”

“Our system analyzes historical buying behavior and adjusts their offerings. With certified and compliant APIs, all data remains secure, banks receive relevant insights about their customers and their customers only see what is actually relevant to them. At the same time, the model we ensure that the bank also receives a share of the commission.”

Bear on the road

Even though it is possible for all types of banks to further expand their product range with the help of open banking, they are often still reluctant to adopt new technologies – especially from external parties. A possible fear is that external APIs could compete with, or even undermine, their own product offerings, as well as concerns about data and technology security. However, not all fintechs provide such bears on the road and banks are also increasingly realizing this.

For example, Cake in Belgium has started a partnership with the Argenta bank. “We offer an API for adequate and fast integration into existing applications, completely based on PSD2”, said Pieter Schelfhout, co-founder and Head of Engineering at Cake. “That is one of the great results of open banking, where banks and fintechs work together to permanently optimize the world of payments and banking, and financial well-being. The big advantage is that we are recognized as a licensed, creditable payment institution and are fully compliant with European law.”

Continuous continuation

European laws and regulations are making it even easier for banks in the European Union to harness the power of innovative fintech. Because in the past they often still had a product-based strategy, they are increasingly turning into total service providers; digital service provider. In addition, banks must continue to respond to changes in customer behavior, such as the increasing number of online payments.

Now that consumers are paying more and more digitally, it’s important to make the most of that data. However, to properly design something like a sofa can take up a lot of valuable time. “That’s why we provide a ‘plug & play’ solution via API, with which we provide relevant added value to banks and account holders through our cashback platform,” said Kestens.

“This creates more loyalty from customers, who open their banking apps more often for cashback and offers, while banks can generate more revenue. Our platform provides additional income on top of the current checking account, with a commission sharing model with the issuing bank. In the end, a win for every stakeholder in the ecosystem.”