It’s easy to push a narrative of fintech upstarts versus the big incumbent banks, but the more subtle reality is that as well as competing on numerous fronts, there are partnerships being formed across the board. The latest such move sees Tink, the Sweden-based banking platform that raised €56 million in new funding in February, partner with British bank NatWest.
The agreement gives NatWest access to Tink’s Personal Finance Management (PFM) and “Data Enrichment” products, which will be integrated into NatWest’s core mobile banking app. This will allow NatWest to improve its mobile banking offering by giving NatWest customers personalised insights into their finances based on transaction history. The features built with Tink’s technology are planned to go live in Q4 2019.
The bigger picture is that by partnering with Tink, NatWest is aiming to meet increased customer expectations with regards to digital financial services. Undoubtedly, a plethora of fintech startups and challenger banks have raised the UX and feature bar significantly in the U.K. and right across Europe, not least via high quality mobile apps and better use of data, while incumbent banks have been scrambling to catch up.
“Historically banks have tried to build everything themselves, but we are now seeing a big shift where they want to partner with the best to propel development, quickly launch new features and stay competitive,” Tink co-founder and CEO Daniel Kjellén tells me.
“Today more and more banks choose to leverage the external building blocks that’s available to them and add in-house uniqueness on top of that. We’ve seen the same development when it comes to hosting – banks are now choosing cloud-based solutions such as AWS instead of on-premise solutions”.
To that end, although originally launched in Sweden in 2013 as a consumer-facing finance app with bank account aggregation at its heart, Tink has since repositioned its offering to provide the same underlying technology and more to banks and other financial service providers.
Through various APIs, Tink provides four pillars of technology: “Account Aggregation,” “Payment Initiation,” “Personal Finance Management” and “Data Enrichment.” These can be used by third parties to roll their own standalone apps or integrated into existing banking applications.
Along with NatWest, Tink has partnerships with a number of other banks including Klarna, BNP Paribas Fortis, ABN AMRO, SEB and Nordea.
Meanwhile, PFM (personal finance management) functionality in some form or another can now be found in numerous banking apps and fintech chatbots, and I put it to Kjellén that a PFM feature is now a commodity. He pushes back.
“It’s true that customer’s expectations on digital banking services are increasing and incentivising the incumbents to develop their PFM tools at a more rapid pace than before,” he says. “But the future where PFM is completely data-driven and where product recommendations, advice and decisions can be put on autopilot is still very far from a commodity”.
“The most advanced players are now building products that… take their PFM apps from being read-only to data-driven and actionable. It’s this combination of functionalities that will be game-changing for the industry”.