SOLARISBANK, the pan-European player in Banking As A Service, has shared a guide to clarify the differences in banking licenses to help you make the right choices for your business.

If you’re a business that’s thinking of working with a Banking-as-a-Service provider, one of the first decisions you’ll have to make is which licence you’ll need: full banking licence, or e-money licence?

It’s also a crucial one. Your decision will determine the direction your business will take, what services you can or can’t offer your customers, and even how you market yourself.

In this article, we’ll explore the key differences between a full banking licence and an e-money licence, their pros and cons, and the reasons you’d choose one or the other.

What’s a full banking licence?

A full banking licence certifies that you meet the legal criteria to operate as a bank. Having this licence means you can:

• Offer payment services
• Manage customers’ deposits
• Offer interest-bearing accounts
• Issue credit cards, loans, and other lending products
• Offer other financial services products such as bancassurance and wealth management
• Use the term ‘bank’ in your name and marketing materials
• Give customers the peace of mind that their deposits are protected by a deposit protection scheme (up to €100k per depositor)

In Germany, a full banking licence is known as a CRR credit institution licence or, more commonly, as a deposit credit institution licence. In addition to the full banking licence, it’s also possible to apply for a licence for individual regulated activities.

To get a full banking licence, you need to apply to the financial services regulator in the country where you want to operate and prove that you meet the criteria. That said, in the Eurozone it’s the European Central Bank that ultimately decides whether to approve an application.

In practice, the national financial services regulator — in Germany, this is BaFin, the Federal Financial Supervisory Authority — receives licence applications and makes preliminary decisions. The ECB then reviews the decisions and confirms them, applies additional conditions, or rejects them.

Because every EU country’s banking laws must meet minimum standards, EU banking licences enjoy what are called passporting rights. So, having a licence in one EU country — Germany, for instance — allows you to offer your services in other EU countries and in the EEA.

How do you get a full banking licence?

First things first, you’ll need to meet a minimum capital requirement. This is an amount of money you must set aside over and above any customer deposits. Banks must also contribute to a depositor protection scheme. By law, if a bank fails, customers have a right to get their money back, up to a maximum of €100,000 per customer.

Alongside minimum capital requirements, you must provide the regulator with extensive documentation. This includes, amongst many other things:

• A business plan that explains how you’ll manage customers’ money and your strategy for becoming and staying profitable
• A rundown of your organisational structure, that is how you’re going to manage and run the bank and comply with the law on an ongoing basis
• A list of potential conflicts of interest

Regulators also conduct a series of comprehensive interviews, plus thorough background checks to ensure the key people who own and run the bank are ‘fit and proper’. The idea is to make sure that those who are in charge or have a say in the bank’s business are trustworthy and have the right knowledge and experience, so your money is safe.

What’s an e-money licence and how do I get one?

An e-money licence allows you to offer payment services and some other financial services products, but not operate as a bank or use ‘bank’ in your name or marketing materials.

Broadly speaking, e-money institutions can:

• Accept customer funds and change them into e-money, but not manage them. Customers can use e-money accounts as digital wallets, but they can’t earn interest on them or go overdrawn
• Offer debit cards, account-to-account transfers, standing orders, and direct debits, but not lending as a standalone product.
• Offer some digital financial services products, such as foreign currency exchange

Like full banking licences, e-money licences issued in EU countries have passporting rights, which means you can offer your services in the rest of the EU and EEA.

That said, it’s national financial services regulators who approve applications. The ECB isn’t involved. The licence application process is also shorterand less comple, and the minimum capital requirement is a much lower €350,000. And, because you can’t take risks with client money (more on this in a minute) there’s no need to join a depositor compensation scheme.

Full banking licence vs e-money licence: what are the pros and cons?

The single biggest difference between banks and e-money institutions is that banks can do four things e-money institutions can’t:

• Manage customers’ money, including investing it or using it to issue loans to other customers at a profit
• Offer interest-bearing accounts
• Offer standalone lending products like mortgages or personal loans
• Hold additional licences. Alongside banking business, banks can also obtain special licences — a payment institution licence, or a securities trading licence, for instance — that allow them to offer a broader range of products and create additional revenue streams

Of course, because banks can take risks with customers’ money, they have to follow very strict regulatory requirements, and are under somewhat more scrutiny than e-money institutions. Which means there’s less flexibility when it comes to how you operate.

By contrast, e-money institutions must keep customers’ money safe in a segregated account with a licensed bank. You can’t touch customers’ money or take any risks with it. Needless to say, this requirement means that, as an e-money institution, you’re dependent on third-party providers, which can make you somewhat less nimble.

Lastly, most e-money licences have limits on transaction volumes, which can restrict how quickly and how much you can scale.

The upside is that e-money licences were specifically designed to allow non-banks to compete with banks. Because there are restrictions on what types of services you can and can’t offer, there’s more operational flexibility. And this allows you to be more agile and innovate more quickly.

Just arrived in Italy, Solarisbank has chosen to join the Fintech District community. We asked to Solarisbank AG to tell us about the objectives of the new challenge and the collaboration with our ecosystem.

How does Solarisbank stand out on the market and to whom it is aimed?

Solarisbank is Europe’s leading Banking-as-a-Serivce (BaaS) platform. Unlike other BaaS providers, we have a full German banking license and local IBANs in Spain, Italy and France too. Via APIs, partners can integrate Solarisbank’s modular banking services directly into their own product offering – We provide the technological infrastructure and the banking license needed, so our partners can: offer digital banking accounts and solutions, rely on identification services, provide flexible financing options, or even integrate crypto banking. We let companies focus on business and customer experience while we take care of banking rules, regulations and bureaucracy letting our partners embed banking services like interest-paying deposits and lending services (e.g. fixed-term deposits, overdrafts, instalment loans, credit lines etc.). Thanks to simple APIs, we can offer these solutions with a great speed to market and scale the financial services our client needs with no business interruption or distraction from the focus on clients and business.

How it is growing?

· Solarisbank is experiencing an exponential growth in terms of its product offering, partners, tech capabilities and also in terms of scope. This year 2021 after a successful and oversubscribed round the capitalization reached EUR 1.4 billion and Solarisbank become a fintech unicorn. The round was followed by the acquisition of Contis, a leading, profitable European payments fintech and Solarisbank became the undisputed pan-European Banking-as-a-Service leader.

Solarisbank drives the inevitable trend of embedded finance by enabling both global brands and fast-growing fintechs to integrate financial services into their own product offering via APIs. In addition, Solarisbank is one of the firsts banks 100% migrated on cloud: this sets a new European benchmark in terms of cost efficiency, scalability and service quality. The space for growth is enormous: according to the latest Solarisbank study made in cooperation with the Handelsblatt Research Institute, the potential for embedded finance and thus Banking-as-a-Service is immense. In Europe alone, nearly 500 million bank accounts are up for grabs in the next few years. Lightyear Capital estimates that the global market for embedded finance will grow from around EUR 22.5 billion at present to around EUR 230 billion by 2025.

Why it has chosen to develop in Italy and what it expects

Italy has enormous potential for Solarisbank; we present ourselves on the market with the aim of driving the growth of Banking-as-a-Service in the country and to help Italian companies to offer the best financial solutions to their customers and, ultimately, to support and accelerate the delicate post-pandemic recovery phase.

Thanks to the introduction of local IBANs in the four major European markets, together with the possibility of passporting our license, we are able to offer financial solutions throughout the European Economic Area. Speed and flexibility are therefore the elements that help us to grow with our current customers and to involve others – from the single-member companies to the multinationals – in this new era of financial services.

What kind of interest do you have in the fintech world and what do you expect from joining the FD community

Joining the Fintech District community is a great opportunity for us to connect with its ecosystem, collaborate and co-create a bright future. The Italian fintech community is one of the most impressive hubs of creativity and the network is well developed in terms of stakeholder engagement. Hence, it offers us the opportunity of collaborating with public institutions, investors, professionals, financial institutions, international innovation hubs, universities and corporations. On our side, based on our experience as leading BaaS platform in Europe, we’ll cooperate in increasing the knowledge of the fintech sector and to share best practices for new innovative solutions connecting both with startups and traditional operators/companies/banks in order to create new services and products and offer an international perspective of business development.

One of the fintech players who has best interpreted the philosophy of open banking with concreteness and initiative is PayDo. We asked their CEO Donato Vadruccio to tell us about the steps taken so far with Plick, his vision and plans for the future.

Open Banking in Italy. How is it developing from your point of view and what could still be done?

Open Banking is an unstoppable process because it is useful to all actors giving them the ability to offer the best services to users allowing the acceleration of innovation. The model, initially born in Europe on the basis of needs and intuitions, has seen a recent acceleration thanks to the European directive PSD2. Although Open Banking in Italy is now a reality, at present its concrete implementation seems to be lower than in other European countries.
We can say that the great challenge of digital transformation, necessary for our country’s system, passes through both Open Banking and API with the support of the fintech ecosystem which is in turn able to be a partner in the realization of this great opportunity of acceleration for the banking system, from credit to payments just to name a few examples.
Open Banking is synonymous with collaboration. In my opinion, we need to build a lot in the co-creation of useful services for companies and end-users.This can be achieved with more joint input from the different actors, banks, fintechs, companies, etc. In addition, some of the ongoing PSD2 interventions will simplify access and use of services.
In short, Open Banking can make a decisive contribution to the process of digitisation of financial services, but, above all,it can bring great added value to households and businesses.

How did Plick seize the Open Banking opportunity?

Open Banking represents the natural path for those who, like us, are fintech operators and provide high value-added services to Banks, Payment Institutions and Electronic Money Institutions throughout Europe and can seize the opportunity provided by Open Innovation.
We have built a flexible infrastructure, which operates exclusively through APIs. We immediately seized the opportunity to publish our APIs on the main Open Banking platforms in order to shape open initiatives. On the one hand, this model facilitates the technical activation of Banks, Payment Institutions and also companies that use these platforms and, at the same time, enables the creation of high value-added services based on customisation, including process customisation.
I would like to remind you that PayDo with Plick has all the requirements to be a concrete partner, whose objective is to support and be an enabler, and not a competitor. We enable simplified payments, which are very useful for companies and individuals, with the possibility of affecting the processes related to the payment itself.

Which collaborations have you undertaken with both banks and platforms and with what results?

At the moment there are several banks and IMELs, in Italy and abroad, with whom we collaborate and to whom we provide our platform with different services, both for their retail and corporate clients. As far as Open Banking platforms are concerned, our APIs are present on Fabrick, Nexi Open and Cedacri, which are synonymous with guarantee and competence, and represent a further sign of trust for us. As mentioned earlier, the concrete result of these collaborations is mainly the advantage of simple integration and, in particular, the possibility of jointly building customised solutions, based on the specific needs of banks, IMELs or companies. These solutions often solve the need for optimisation of processes and underlying information, and not only of the payment in the strict sense of the word, which is obviously simplified thanks to Plick, which sends it via WhatsApp, SMS or email even without knowing the IBAN, throughout Europe and even in bulk.
This collaboration has enabled Open Banking platforms to implement solutions for businesses: for example, it guarantees mass mailings, such as in the case of refunds to customers by utilities or consumer credit companies or claims payments for insurance companies.

What are your next projects?

We are working on further consolidating our business in Italy, thanks to the partners who continue to choose us. We will continue to develop new services, such as the very recent “Digital Letter of Credit”, which was initially created to meet the specific needs of a biomedical company. We will soon be announcing new partnerships to support payment solutions and in some cases specific supply chains that will further demonstrate the open nature of our project.

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Utego, one of over 150 fintechs in the Fintech District community, has become the first non-banking Italian AISP (Account Information Service Providers). We asked CEO and Co-Founder Stefano Musso how this important milestone has been achieved and how they intend to progress in the market now.

Which was the path that led Utego to become the first non-banking Italian AISP?

The idea of proposing a financial aggregator to the market was born on an evening in the spring of 2018: wine, scattered reflections and professionals – active in the banking sector – eager to ride their own vision, after years of corporate projects often successfully implemented, sometimes nipped in the bud.
Since that evening the idea grew: we immediately realized that developing it in a bank would make no sense for the end users. According to our vision who would, in fact, want to aggregate all their accounts in a bank thus making visible all their financial assets?
We remember we had a meeting with you at Fintech District to get an opinion about our idea. Your feedback was “Beautiful idea but to develop a fintech on your own in Italy means blood, sweat and tears!
It was a great challenge and we worked on it 24 hours a day, on weekends and holidays and meanwhile our professional lives were taking a new direction: from the development of additional features in addition to the financial aggregator, business plan, pitch with investors, up to the most important step: giving up our fixed position to get serious. The interest for our application was growing day by day and in fact this is how Utego was born.

This happened at a particular time for Italian finance when it was certainly clear that it had to adapt to the requirements of the most recent European and national regulations, such as the one regulating AISP, but in which the banks were still afraid of a possible entry in the sector of third parties proposing new services

The path from then until today is almost a cliché. Technological development, organic growth, partnerships, beta apps available in the app stores, some important acknowledgements from the market, many “no, thanks” or “yes, however”, but also a lot of confidence in our vision, all very clear to us. So clear that in 2019 we rejected a six-figure investment proposal from a bank in exchange for equity. As you say, that “…non-bank” is important to us; we consider independence from credit institutions in offering the aggregation service, an important competitive advantage. More than technological innovation, innovation of corporate identity was important to us.

What were the biggest difficulties and what/who helped you?

The most difficult challenge was to comply with the regulator’s requests in obtaining authorisation to operate the account information service referred to in Article 1, paragraph 2, letter h-septies. 1), n. 8, of the Consolidated Banking Law (i.e. to be AISP).
Our governance structure today is that of a credit institution and of a “mythological” new-co created by a couple of guys in a garage, while inheriting from the latter formula the speed of execution and flexibility of change: Shareholders’ Meeting, Board of Directors, Advisory Board, Board of Statutory Auditors and Independent Auditor, Sole Control Function for Audit, AML, Risk and Compliance. We also had to implement the layers of adequate verification of our users and anti-money laundering controls, while not managing money and not giving any , for the time being, nor making available any possibility for our users to make dispositive transactions on their accounts, from our application. Certainly in this path the confrontation with trade associations and dialogues with institutions can help; in the Advisory Board of Utego there is also “A.P.S.P.”. (Association of Payment Service Providers), that is very active in this context.
However, it is essential with these issues to have a strong legal and compliance solidity on both the legal and compliance fronts, both by structuring internal competence centres and by making use of external, authoritative professionals with years of experience in the market.
On the internal front, Utego now has a Legal, AML and Privacy function, while externally it makes use of the services of the law firm “Atrigna & Partners” which assisted us in the administrative procedure for the issue of the Bank of Italy’s authorization to operate AISP and the firm “LaScala – Società tra Avvocati” which will follow after the development of our company as FUC

What changes in your business after this achievement?

I’d say basically nothing. Almost at least. We always remember that although our app is already downloadable from app stores in beta version, it has yet to be officially launched on the market with the functionality for which it was born, that is financial aggregation. It will be able to do so from September, right after the goal just reached, so to this regard I would speak of “enabling success”, rather than goal. On the contrary, for us the authorization to operate as AISP is only the starting point!

What is changing is due to the strong barriers of entry we had to overcome. This has intensified the prospects of B2B business, accelerating contacts with third parties who ask for the Utego aggregator in white label, and with those who offer us payment services to provide an added value to our end users. However, these are already pipe-line business developments in our business plan and we are carefully evaluating all possible scenarios.

What is your next goal, say for the end of 2020?

I can tell you two of them: to officially launch the app, complete with financial aggregation functionality, and exceed 20 thousand users.

How did you experience the lockdown as a company: what was the impact on your business and how did you react?

As a company our experience went well. Working from your PC, wherever you are, even at the bar or on a beach, is not a point of attention for us, but the satisfaction of those who work is; here the “place” can make the difference and we are aware of this. Today the “place” of work can finally be indifferent in importance, even in Italy with the new enabling technologies; just developing a culture of responsibility and always keeping an eye on the result. Of course, there are three areas of attention that we must know how to govern well: the first is human relations, which remain fundamental and will perhaps need to be reinterpreted in the future, with respect to how we live it these today, both personally and in the HR cultures of our companies.

The second is a sustainable balance between professional and private life. If the culture of responsibility and result orientation are too strong, it may be easy to balance the latter in favour of the former and this does not bring wellbeing.

The third is the maintenance and strengthening of a strong corporate identity that is built every day also through the casual exchange of ideas and opinions, which can only happen in a context of shared physical location. As for the impact of the lockdown on our business, if the Regulator hadn’t closed the offices in charge of receiving applications for two months, we might have been able to launch the app before the summer. However, it was a good time for dialoguing with financial and insurance partners in general.

Utego, in addition to the aggregator, also offers users a marketplace where they can find and choose the product best suited to their needs. This showcase must, however, be populated with financial products supplied by third parties. During the lockdown we fixed partnerships with Revolut, N26, Qonto, Penta (now on standby on the Italian market) and Gimme5 to have their products found in our Showcase.
Other Italian banks are on the list, but I cannot reveal their names yet.

Moreover, Utego also has a Financial Education feature, which during the lockdown was enriched with an “Investment focus”, populated with Gimme5 contents and an “Insurance focus”, with Axieme contents.

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A short guide to the actual opportunities created by the PSD2-triggered big bang

by Enhancers

PSD2 is the European directive which requires banks, upon customer request, to open their information safe and share financial data with third parties (whether they are players that initiate a payment — PISP — integrate balances or customer account movements — AISP — or deliver debit cards linked to accounts held at the account rooting bank — “fund checking”).

For the first time an exchange of information considered not transferable until yesterday is allowed in the banking sector. The practical consequence is an opening not just for traditional actors, but for anyone who is able to offer value-added services for final customers, building solutions based on those data.

The most immediate results of the implementation of this new model will be recorded in the space of payment systems and personal financial management tools (becoming more effective because they’ll be able to aggregate data from the whole financial life of a user, like it’s been happening in the United States for years with products like Mint). However, there is a huge layer of possibilities yet to be explored, especially outside of the banking space.
Cash flows represent tangible traces of behaviors, habits, tastes, opinions, emotions. On these tracks we can build meanings and value in apparently unrelated areas, such as energy, mobility, sustainability or job-matching, and build systems based on processing, crossing and enriching financial information.

Challenger or partner?

Big tech, car manufacturers, retailers, utilities — and the list goes on. Players coming from different industries, contributing to the building of a rapidly expanding ecosystem of services. While quite often the Open Banking paradigm still inspires banks in developing “first level” solutions that stay within the boundaries of financial products, someone has already moved further: we are in the Open X age (a definition introduced by the World FinTech Report 2019).

OpenX: paradigm for the fruitful collaboration between banks, fintechs and third parties. It is based on four pillars.

1. Focus on customer experience;
2. data as the main asset;
3. partnerships between banks and third-party companies;
4. sharing economy.

In a participatory scenario like the one just described, each player is highly specialized in a specific role. The competitive advantage is based on the “know-where”: the knowledge of the location of the actors capable of contributing to the bank’s value generation. Institutions must strategically select their partners, adopting a collaborative approach that keeps users at the center, their data as a currency and the satisfaction of their needs as a goal. The shift from a product-centric model to a customer-centric will help crossing the boundaries between primary markets, responding to different expectations and desires of customers.

What services will be enabled and introduced into the ecosystem to achieve this purpose?

Expansion

Iren, the multi-utility based in Reggio Emilia, provides us with an interesting example from Italy. The company debuted in the world of payment, asking the Bank of Italy for authorization to operate as a payment institution. It will be able to carry out the main activity made possible by PSD2: access to customers’ account data — obviously with their consent— to directly charge and refund users without going through credit cards and direct debit. Once this pass is obtained, Iren will be able to directly manage the settlement of bills, also by limiting cases of arrears, and above all to use this precious tool (made available through mobile apps) to sell many other innovative and digital services to customers.

In the United States, a Capital One initiative shows the same approach in a different area: the bank has created an open API platform to improve the automated financing experience used by vroom.com, a platform that let users choose and buy a car online and get it delivered at home. The system allows buyers to get a loan for the vehicle directly during the check out process. A solution so light and transparent — and so radically different from the traditional personal loan request process — to encourage users to leave reviews like this: “financing was better through Vroom than my local bank”.

Beyond the paradigm

The key question is: once you have crossed the threshold of Open X, how far can innovation and service expansion of financial products go?

Iren’s example is a possible starting point for further reflections, beginning with the energy industry: will a new approach like this lead to liquifying the very concept of the electric bill? For example, by imagining a way to segment each payment into smaller installments, or by delegating to an AI. the task of identifying the best time to pay, perhaps when there is a spike in liquidity in the account? Introducing maybe an open deadline model to create a safe, reliable and customer-friendly tool? Potential and desirable futures begin today.

If you are interested to know about the collaboration between Fintech District and Enhancers, click here

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Fabrick and Bandyer have launched Virtual Branch, a solution that allows banks and corporates to continue to be operational in the relationship with the client, despite the restrictions due to the coronavirus. It is a service created to meet the needs of companies and banks in an emergency but not an end in itself and not even limited in time because at the conclusion of the period of social distance the product created by the partnership with Bandyer can be branded and used in everyday life as a useful alternative.

In this double interview Filippo Rocca (Bandyer) and Alberto Mussinatto (Fabrick) tell us about the potential of Virtual Branch and what can be achieved thanks to open banking and an open ecosystem like Fabrick’s one.

Filippo Rocca, CEO and Founder of Bandyer

What is the Virtual Branch solution for? Who is it for?

The Virtual Branch solution is aimed at all the realities that are currently in difficulty in the relationship with their customers and need a fast and simple response to enable an effective communication from the digital point of view, opening a collaborative channel and not only communicative. For those who have fallen behind on this aspect, Virtual Branch represents an opportunity to make a quick digital leap forward, a necessary leap to ensure the continuation of business activities today. This emergency will change behavioral and consumption patterns in the long term, not only in the short term. Many critical issues will emerge, but also many opportunities. Those who have not yet developed digital channels will have to meet the demands of their customers who will increasingly want to be able to operate remotely and avoid physically visiting the company to use their services. Virtual Branch is the solution to this problem.

What is different from other video collaboration solutions?

Bandyer does not aim to create a product of UCC, unified communication and collaboration, of which the market is saturated. The partnership with Fabrick proves it. Virtual Branch aims to enable all its features, through its REST Api and SDK, within financial environments. We are today the most flexible and fastest solution to integrate. Virtual Branch was born as a response to this contingency period in which we realize that giving a simple solution without installation, unlike many players known on the market that very often require to install software and/or plug-ins for proper operation, completely web based not only from PC but also from smartphone. With our product just one click and you’re on call! Through Virtual Branch we want to show the importance of digital channels within the relationship with its customers, and at the same time highlight the technological goodness of our solutions, to then push the integration of our technology within the company’s apps and websites to engage their customers from the applications they already use daily.

Effort and timing of adoption by banks/customer companies and how can it evolve in the future (after the current emergency)?

The adoption times of this solution are extremely fast, less than 24h, and do not require the installation of any software component and/or plug-in for proper operation. We strongly believe in the adoption of these tools by financial realities because they ensure a lasting and effective relationship with their customers. This emergency will change behavioural and consumption patterns and the increasingly used digital channels will enable a series of remote “opportunities”. Integrating them within their own solutions can prevent the customer from perceiving a change of application and always remaining within the reference solution. It is said that history is a very good teacher but it has bad pupils, we hope that we can learn from this to evolve how we use our services.

Alberto Mussinatto, Strategy and Business Developer at Fabrick

What role did open banking play in the creation/launch of this solution? And what future scenarios does it open up to?

The collaboration with Bandyer, one of the first partners of Fabrick’s Open Platform ecosystem, was born from a common vision. We are both convinced that one of the bases for the development of open banking is the possibility, in addition to innovating current technological solutions, to build concrete use cases to enable new forms of relationship and interaction with their customers. Today the need to minimize physical interactions is combined with the need to ensure business continuity and also to strengthen the relationship with its customers. In this difficult situation it has emerged the possibility, by combining the respective visons and technological capabilities, to enable a new channel in which to channel to customers all the value of advice and relationship that is normally generated in a physical interaction in a branch. For this reason we decided to call the service “Virtual Branch“.

How does the launch of Virtual Branch fit into Fabrick’s business strategy?

In such a rapidly evolving context, we have first of all thought about how to respond quickly to our clients’ needs, and for this reason with Bandyer we have defined a very light technological set-up that allows you to be live with the Virtual Branch solution in 24 hours. This rapid response is part of a broader strategic framework in which our role as a platform is both supporting and enabling the evolution of the digital channels and tools of financial institutions serving private and corporate client segments that, especially at this stage, are proving to be very reactive to digital transformations. The Virtual Branch service therefore aims to be the test-bed for several use cases related to the digitization of physical networks. This will lead to the subsequent integration of the tool in white label by the institutions, with the aim of enabling a new way of providing the services of their corporate networks as well as their digital services while maintaining a high level of experience and a human relationship.

How has the COVID19 emergency affected Fabrick’s development of new services/products with its partners/producers?

The COVID19 emergency has certainly also had an impact on our development strategy/products and services, especially in relation to the multiple possibilities to respond to new needs with the different use cases available and under development with our partners. In fact we have witnessed a strong acceleration and awareness of demand especially towards some services, in some cases already available in others still under development.
We have adopted a two-step approach, a first mainly tactical phase in which we have quickly prepared enabling solutions with our partners, and the Virtual Branch is the first example, available very quickly. We are trying to ground further solutions at a different level of maturity in the areas of e-commerce, e-payments and in some specific cases specific support to institutions.
At this stage, in addition to putting the maximum effort into the development of rapidly deployable services, we are working closely with all ecosystem partners to build medium-term solutions that will support financial institutions and enterprises at the end of the COVID19 emergency. At this stage, we are developing some new specific services dedicated to financial institutions and enterprises in the credit, insurance and data analytics sectors to support the restart of the sectors that have been most affected by this emergency, such as tourism and physical retail.

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Open banking is one of the most pronounced words in the fintech sector. In 2020 we should see concrete results after the entry into force of PSD2 on 14 September 2019 and the many promises made for of following months. Marco Scaccia, Business Developer at Fabrick, held a mentorship session on this, to the startups of our community, to explain what open banking can mean for a fintech with examples and case histories.

Why is open banking considered “revolutionary”?

Because it offers an opportunity to all European Financial Institutions at a very special time for traditional banking players. Industry players know that, for example, margins from transactional services are increasingly shrinking. This can put many banks, that have relied on these revenue lines for decades, into difficulty. These “commoditization” dynamics are also occurring on other fronts. Open banking allows banks to “open up”. Indeed, thanks to PSD2, it obliges them to do so. This offers many opportunities for creating new value-added services and shifting investments to the construction of new use cases.

What concrete opportunities do you offer fintech operating in Italy?

From my point of view, fintechs should not necessarily be perceived as a competitor of banks. On the contrary, they are very often the essential partners of Financial Institutions that want to take advantage of the opportunities provided by PSD2 and open banking in general. In this context, Fabrick puts itself forward as a reference platform connecting the ideas and technological skills of fintech with the needs and investment capacity of incumbents. This is the first concrete opportunity for Fintech and, at Fabrick, we are seeing these synergies more and more frequently.

The second opportunity is definitely PSD2. The two major innovations it introduces are AISP and PISP.

• AISP (Account Information Service Provider) are third party providers (TPP) accredited by the regulator of the reference country (Bank of Italy in the Italian case) that can perform multi-account information operations, potentially within all European payment accounts. AISPs can also analyze the data obtained to gain insights and develop value-added functionalities to propose to their customers.
• PISPs (payment initiation service provider) are TPP that, on the other hand, initialize payments within accounts. PISPs must also have a specific license in order to operate. It is clear that both AISPs and PISPs have the possibility to rethink traditional banking services and to create new ones.

Two tips you would give to fintech to make the most of things

The first piece of advice is to think about your business strategy with, amongst other things, a view to a partnership with banks and trying to understand how the technical skills developed can be complementary with traditional banking services. For open banking to be truly successful, the relationship between fintech and incumbent will be fundamental.

The second one, with reference to the opportunities dictated by PSD2, is to choose a partner that is able to simplify the activities necessary to operate as AISP and PISP. An example could be by adopting a model that simplifies the regulatory and compliance requirements of fintech. This would allow them to focus on their core business. The PSD2 solutions provided by Fabrick are able to provide fintech and banks with the technology infrastructure and simplify compliance aspects.

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Australia has a thriving fintech ecosystem that is evolving rapidly, driven by the growing appetite for digital services. This is also creating an array of opportunities for international fintechs seeking to expand into new markets.

Given the diversity of the Australian fintech market, there are opportunities across a wide variety of subsectors, including payments, wealth management, data analytics, lending, insurtech, regtech, property tech, P2P, blockchain/distributed ledger, neo-banks and others.

Hiroki Takeuchi, the CEO of UK fintech GoCardless, which also has an office in Australia, advises his company is growing around two to three times faster in Australia and New Zealand than it did in the UK when it first launched.

Further growth opportunities will continue with the introduction of Australia’s Consumer Data Right (CDR) and Open Banking framework, which also includes a commitment to educating consumers and businesses about the advantages this offers.

The Australian Open Banking framework is based on the same structure as PSD2, providing an easy transition for European fintechs seeking to expand to Australia.

The difference in Australia’s approach to open banking however “is that it is the first part of an economy-wide Australian Consumer Data Right,” explains Scott Farrell, senior partner at King & Wood Mallesons and co-chair of the Australian Government’s FinTech Advisory Group. Scott advises that the starting point for Australia’s framework was based on understanding how data can increase productivity and innovation both for the nation and for Australian consumers and businesses.

“This right for customers to control, to make choices, to have convenience and confidence in sharing data, will start with Open Banking and is designed to create a level playing field, where customers can transfer their data when it benefits them. We have already started extending this framework to the energy sector and following that, to the telecommunications sector and in other parts of the Australian economy, including other parts of the financial services system, such as superannuation (pension funds) and insurance. If you are a business in Europe already dealing with the regulatory requirements of PSD2 and GDPR, there is a commonality of the platform, as the technology standards are based on those used in Europe and the United Kingdom”.

“The differences come from the expansion of the landscape that you can apply your technology and business model to, because if you bring your model to Australia, you can bring it not only for banking customers, you can bring it for telecommunications customers, retail customers and energy customers – in fact, you’re able to leverage your open banking business model into the entire customer base of all Australians.”

An important part of the roll-out of Open Banking is that Australians will be informed about the opportunities the system offers them, “as this is a fundamental part of delivering the outcome,” confirms Scott. Australian banks will provide the majority of Australians with access to their data by February next year, with the remainder being completed within the following 12 months.

Fintechs in Australia have also welcomed the establishment of a Senate Committee, which will examine the scope and opportunity fintech offers to consumers and businesses, and ways to continue to foster a positive environment for financial and regulatory technology in Australia.

For more information about expanding to Australia, please contact Sheralyn Derrick at the Australian Trade and Investment Commission office in Milan at sheralyn.derrick@austrade.gov.au

We have already talked about Australia and the opportunities that the country offers to fintech in this article

A new partnership with a bank, two new investors and more and more recognition from their users. For Deposit Solutions last summer was really “a very lucky time” as explained by the Regional Director for Italy and Malta Ermanno Ciarrocchi who sees two main opportunities in the Fintech District entrance: greater visibility and relevance in institutional relations and the creation of new services dedicated to fintech.

Deposit Solutions is the open banking platform that can revolutionize the value chain for both banks and savers. For banks that are interested in collecting or diversifying in Europe, they can use a plug and play service to access points of sales that are “points of access to an audience of savers that we estimate to be over 30 million“.

“On the other hand, the banks interested in expanding their offer in the field of deposits can, for the first time, offer deposits belonging to third-party banks making use of the same banking relationship and therefore maintaining a direct relationship with their savers – explained Ciarrocchi – The impact of this innovation is that savers for use deposits for the first time as a real asset class through the existing relationship at their bank or their non-bank point of sales and are therefore able to make portfolios of deposits at banks across the Union European without having to establish direct contact with any of them.

Last summer Ciarrocchi said there was the launch of a new Italian bank, Banca Sistema, with which Deposit Solutions has established a new partnership. There was also a new 100 million dollar financing round that brought the company’s valuation to half a billion dollars. Ciarrocchi also recalls the entry of two new investors, Vitruvian Partners and Kinnevik “that give us further impetus for the international roll out of our solution”.

Moreover, in recent months, many banks connecting to the Deposit Solutions platform to diversify their collection have started to mention it in their report and in their presentations to analysts. “In particular, HSH Nordbank mentioned us in its six-month report, indicating how thanks to us they collected € 2.9 billion in deposits in just 10 months”.

Born with a strong international footprint, today Hamburg based Deposit Solutions operates in a harmonized European regulatory framework and is already present in 16 European countries with local representatives, already connecting 70 banks of different types. “The idea, also implemented through the round of financing just ended – explained Ciarrocchi – is to further accelerate this expansion at European level and strengthen it primarily in Italy”.

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