Transforming Business Banking with Open Banking Technology

It’s no secret: the UK FinTech industry is booming. And with challenger banks, payment providers, and accounting package companies not set to slow down on the innovation front anytime soon, traditional banking institutions have had to fight for their share of the pie.

Recent regulatory changes around open banking have resulted in a wide range of financial solutions for SMEs to choose from. Rising expectations from sole traders and micro-business owners ramp up the pressure for banks to step up and provide services they never did before, such as invoicing, reconciliation, and bookkeeping options. Dropping the ball right now may mean losing touch with a vital customer base — and there is no guarantee those customers will come back once they leave.

It’s a highly competitive space, but it might just be the best incubator for change. One company in particular is flipping the script and showing banks that open banking technology is not a threat, but the best opportunity they could have hoped for.

Keeping a firm grasp on both the pulse of innovation in the FinTech sector and the ever-changing needs of the customer, BankiFi is helping to create efficient and user-friendly banking solutions to problems that SMEs face on a daily basis.

And unlike most FinTech startups ( in fact, they reject the label), BankiFi does not compete with banks — it teams up with them.

BankiFi provides a data-driven distributed banking model that allows banks and financial services providers to manage, consume, distribute and monetise data. Leveraging the strengths of the relationship between individuals and banks, they help leading financial institutions to move away from the traditional business banking model, build confidence in their services, and provide a holistic experience that rivals challenger banks and FinTechs. And they do it all through leading-edge technology.

The company has been trailblazing change in British and European banks for years. Now that they’ve opened two new offices in Australia and Singapore, they are ready to break into new markets.

BrightBox caught up with Mark Hartley, Founding Partner at BankiFi, to get his perspective on the seismic shift we’ve been seeing in the banking space. Mark talks about the challenges of scaling a startup during a global pandemic, the future of business banking, and how working with resourcing partners like BrightBox is supporting BankiFi’s global expansion.

“Open banking has the potential to radically shake things up in the payments space — so long as the awareness of what it can do for a business or for a consumer is managed properly, rather than being seen as a security challenge.”

— Mark Hartley, Founding Partner at BankiFi

Hi Mark, thanks for sitting down with BrightBox today to talk about the ways that BankiFi is changing the game when it comes to business banking.

We’ll jump right into the exciting bit. What do you think of the concept of the ‘super app’? You could argue that some challenger banks are trying to create all-in-one marketplaces that are connected to all the third parties you can imagine. I can certainly see a place for that in the industry, and how it will come about — and payments might be the thing that’s going to drive it forward. What do you make of it?

Open banking, machine learning, AI — all of these emerging technologies are here to provide solutions to particular problems.

There’s a really interesting new-ish term that’s starting to be talked about, and that’s embedded finance or embedded banking. It’s an experience-led thing where you start to think of financial services as a feature of an overall product or experience.

Think of an e-commerce transaction, for example. When you’re going to buy a particular product, you might go on a product comparison site, research where you can get it the cheapest, and look at things like delivery and logistics. It’s not just about the product itself — and it certainly isn’t about the payment. The payment just happens to be one of the bits of the buying process that you go through, and at the end of the day, it’s probably the bit that we don’t want to do because it means having to give money away.

The payment is an embedded feature inside a holistic experience — and that's the way banking and finance are going to go.

It puts a very interesting challenge out to banks, payments providers, insurance companies, and financial services companies. They’ve already spent an awful lot of money on their channels, including mobile, internet, call centres, all sorts of things. Those channels are silos that cost a massive amount of money to run. Now, things like APIs are becoming a channel too.

Suddenly, these organisations are weighing their options, wondering whether they should have a dedicated channel from which customers can do their banking, or if they should start thinking about having APIs embedded into other services — distributors and experiences that the bank will then participate in. Payments providers such as Stripe and PayPal have done that brilliantly. Rather than customers processing their payment from a dedicated mobile or bank-branded channel, banks should start thinking about having payment APIs embedded inside other experiences.

But on the other hand, the reverse works. Accounting package vendors and the likes of Shopify and Stripe are putting together holistic experiences for small businesses. I can go to Stripe right now and create a business on their site. I can register my company, I can get a bank account, I can get payments — and they create a workflow around all the things I need to do to run a business.

That’s what banks need to do. Rather than just being a place to make a payment or get a current account, they need to transform their bank channel into a place I go to run my business. As a business owner, I need to think about being able to invoice, do my accounting and bookkeeping, process my payments and collections, set aside my tax. They can all become part of this embedded workflow processing — and I think that is the way that financial services will go.

Banks will still have their own channels, but those channels will be powered by APIs, in the same way that those APIs could be exposed inside somebody else’s channel. It becomes a very different model through which they distribute their services and their proposition.

The world of open banking is constantly changing. What is BankiFi’s role in the change, and where do you see yourselves in five years?

We get pigeonholed as a FinTech startup, but we’re not. A lot of FinTech is sprung up on the back of deregulation — they’re here to disrupt and chip away market share from traditional financial services. That’s why we have such a burgeoning FinTech scene in the UK — because our regulator, whether that’s the FCA or the CMA, wants to see competition. But we set BankiFi up to do exactly the opposite of that.

I've been in financial technology for over 25 years, and I've been a supplier to banks in various guises. Everyone thinks that open banking is a threat to traditional financial services, but I think that the deregulation and the introduction of APIs have actually created a massive opportunity for banks.

They can now get customer information from their traditional competitors. As an individual, if I’ve got a relationship with HSBC, Barclays, Lloyds and others, those banks can now start seeing all my data at these other organisations. And they can start offering me better services because they now have a holistic view of my finances.

What we’re trying to do is help banks realise that opportunity through things like open banking, APIs, and moving away from cash to digital payments. Covid has catalysed this even further because it’s shown that we don’t need cash or checks. You can do everything on a card or even on your phone now — you don’t even need a piece of plastic.

Post open banking, the biggest competitor of a bank is an accounting package. You can export all of your information from your bank account into Sage, Xero or Quickbooks and have a live bank feed. You can do all of your invoicing, bookkeeping and reconciliation directly through your accounting package. As soon as they start offering payments, what will you need your bank for?

So we’re flipping that model on its head. We’re telling banks: “You’re being attacked by accounting packages, the Shopifys, PayPals and Stripes of the world. You need to think like they do, and start offering more than just banking services. You need to make things available to your customers based on what they need — not on what you want to sell them.”

Our role is to help banks to give their customers what they want and to refocus solely on small businesses, from sole traders to micro-businesses all the way up to 50 employees. We’re building services that banks can white label as their own and offer them to that underserved cohort of organisations. That includes features like invoicing, accounting integration, collections, matching and reconciliation, and making tax digital.

Banks have never done these things for businesses. They only think about selling a product, such as a current account or a loan. But we’re telling them: “Think how your customer thinks and give them the services they need to operate their business — because that’s what all your competitors are doing.”

We certainly can’t ignore the last twelve months. How has that changed your approach to the business and solidified your views and your proposition?

It’s been a mixed bag, really. We just opened an office in Australia. We were supposed to do that in March 2020 but then the little pandemic came along and made us refocus. Everybody battened down the hatches. We went into a funding round, and it was all about making sure that we were still around, to be brutally honest.

Having said that, there were some really positive things that came out of it. From the outset, we decided to be a paperless business with everything stored on the cloud. That made our business continuity plan easier to implement. Everyone was scrambling to figure out what to do when there’s a force majeure event like a global pandemic, and everyone has to work from home. But we were already doing that. We already encouraged our employees to work from home a couple of days per week. So it was really just a matter of moving that to full-time remote working. The transition was like clockwork.

Bringing people into the business is a whole other story. Building new relationships and hiring people is hard if you’re doing it over a video call. You lose the body language and the face-to-face rapport. That’s been difficult.

We implemented things like regular coffee mornings every day during lockdown, so people still felt that they had that interaction with other human beings. On Fridays, we switched it to afternoons, and people could have a beer or a glass of wine and not talk about work. We made it optional, but we found that everybody was going to them because they wanted to have that contact. I know some of the staff sop much better now than I would if we were physically in the office.

Our augmented staff have joined in on the social things as well, and they’re all over the world. We’ve got people in Hungary, Romania, Belarus, you name it. The virtual get-togethers really helped to get people through the pandemic. It’s alright if you’ve got a nice back garden and a home office, but if you haven’t, that kind of respite from the mundaneness of it all was brilliant.

Covid has made business, hiring, and the working environment much harder, but we got through it and we know we’ve got a process that works. We closed out our round of funding, and we’ve opened offices in Australia and Singapore. So I wouldn’t say it put us back twelve months — it made us focus on different things that were really important, such as securing the financial stability of the company. It’s not a year I’d like to go through again if I’m honest!

A lot of companies are now looking at their resourcing approach and towards more agile sourcing solutions. We’ve been supporting you through team augmentation — has the last year influenced how you work with partners like BrightBox, and how you’re going to source in the future?

It absolutely has. As a software product development company, we want to make a product that is sellable all over the world. It’s really important that our product is built by a core group of people. But in terms of selling it to banks, we want to keep product development — from integration and customisation to implementation at the financial institutions — separate from the core product development.

Before Covid, there used to be a theory that you had to be right next to your customer to do your project deliveries. That’s been blown out of the water because you couldn’t say you were going to have a hundred people on the ground on the customer’s site. Everyone had to move to a model of distributed development and distributed ways of working. My belief is that it will continue, and we will continue to work with partners to augment our staff with people that help us implement our products at various customer sites to cater to different environments and requirements.

The last year has crystallised our belief that we want to do core product development ourselves. But working with implementation partners will become more prevalent as we grow. And we don’t want to go to the big parties to do that. Partners like BrightBox are agile and nimble — you think the way we do and fit in with the way we work. Going forward, the idea is that we’ll have our own core product development done in-house, but work with implementation partners like yourselves to bring that product to banks all over the world.

There’s always new technology and new concepts coming in. What do you see on the horizon? Looking forward, what things are interesting to you?

I'm not a believer in technology for technology's sake. Some technologies are built looking for a problem to solve, rather than being created as a solution to a known problem. We’ve talked about the obvious things such as APIs already, but we’re also looking into artificial intelligence and blockchain, especially around cash forecasting. I'm not going to give the game away, but we are looking at both of those things as solutions to specific problems.

On the programming side of things, we chose to build our technology in Scala and Akka. Banks are heavily regulated, so their platforms always have to be on, performant and scalable. People like Netflix and others have built substantial parts of their platform on Scala and Akka because it performs, and is built on a discrete microservices model — you’re never going to bring the whole system down. Augmentation around availability, scalability and optimisation of services is really important because there isn’t a wide set of resources out there in the world with skills in these languages. That’s definitely an area where we want to leverage partners like BrightBox.

We’re always looking to enhance, and the product is never finished. Equally, everything becomes legacy at some point in time. One of the things we’ve done as a consequence of this round of funding is building a small research department where we’re not thinking about product development as such, but we’re carrying out research around technologies we could use in the future. It’s more about learning than anything else. We’ll be looking to work with partners such as universities to help us understand how we can utilise leading-edge technology to solve real-world problems for SMEs.

Our focus is on supporting banks in helping SMEs, and we need to find technology solutions that optimise and make things more efficient for them. We know what those problems are because we are a small business ourselves. So we build stuff that helps businesses like ours.

Where are you hoping to be with BankiFi by the end of the year? What are your main objectives?

Last year we battened down the hatches and went into build mode. We consolidated our position and raised the money. Now, having opened two new offices in Singapore and Australia, we want to work with more customers out there.

It’s a very timely thing. Australia has only gone live with open banking in the last year, and they’re going live with open banking payments this year. The regulatory environment is slightly different, but everything is built on English law, so it naturally lent itself to be the next place we go. If things go well, we might look to doing something in the US next year.

We’re also expanding our headcount. There are around 25 of us now, so by the end of the year, I imagine that number will be over 30.

There’s a lot of statements right now about doffing the cap and making FinTech a more regional thing in the UK. But I know Manchester, Newcastle and Liverpool will never be able to compete with London, and equally I’m not really interested in focusing inward. There’s a wider world of opportunities outside of the UK — and I want to solve the problems that we’re solving for small businesses in other parts of the world, because they’re the same everywhere you go.

One example is late payments. We have a shocking problem with late payments to SMEs in this country. The average late payment is £6000, and it’s taking businesses that have 30-day invoice terms 71 days on average to get their money. That’s compounded by Covid. Australia has an even worse problem with late payments. These are the kinds of problems I want to solve all over the world, and Australia and Singapore were the two places we picked first.

Finally, do you have any recommendations of people, books or podcasts to follow in the Financial Services space?

There are two people I personally know quite well who are very worthwhile following if you haven’t already.

The first is Chris Skinner, who has written multiple books on banking. He’s a provocateur, poking the banks in the eye telling them what they need to do.

The other is David Birch, who is a Director at Consult Hyperion. He’s a hilariously amusing guy, but so knowledgeable — and a proper practitioner. He’s not one of those people who stand on the sidelines and becomes a commentator. He’s been in the weeds.

It’s been fabulous talking to you, Mark. Hopefully, we can catch up again!

BrightBox is a UK-based managed delivery partner that has a heritage in FinTech and Financial Services. We know what it takes to deliver in this heavily governed and regulated industry, meaning that your company can focus your efforts on high-level strategy, knowing that you have a trusted delivery partner to support you on your journey.

We partner with over 2000 trusted nearshore specialists in Poland, Belarus, Turkey and Greece to deliver staff augmentation and nearshore teams that extend in-house capabilities and help cater for skillset gaps. Our job is to provide an assurance layer between clients and teams to minimise risk, maximise outputs and ensure high-quality service throughout.

Click here to read more about our resourcing approach for FinTech and financial services firms.