EXCLUSIVE: “Time to buddy up?” – Kim Van Esbroeck, Aion Bank; Henri Dewaerheijd, Mastercard and Jonathan Fallon, Tricount in ‘The Fintech Magazine’

A partnership between Europe’s Aion Bank, its core banking provider Vodeno, Mastercard and expenses app Tricount is a textbook example of how playing to your strengths can deliver benefits for all

With a little help from my friends was one of the few Beatles’ tunes on which drummer Ringo Starr took the vocal lead. Written specifically for him by bandmates John Lennon and Paul McCartney, they also helped Ringo hit that famously high final note in an all-night recording session. It went on to become one of the most successful pop songs of all time, included on a rock album that changed the music industry. What does that have to do with fintech?

Well, financial services providers, large and small, are also learning that chart-topping products are best achieved through collaboration. And that’s also altering the course of their industry. Belgian-based expenses management app Tricount is a case in point. Designed as an app to make splitting expenses easier, it works like a shared Excel spreadsheet – crunching the numbers to balance costs and ensure that no-one over or underpays.

Its intelligent calculator can generate messages over chat or email, enabling friends and colleagues to enter expenses and then let them know who needs to pay what, or who they can expect payment from. It’s smart but not necessarily as smart as it could be because until recently, the only way of settling the balance was through sharing your IBAN or by using PayPal.

Now, through open banking, Tricount users in Belgium and Luxembourg can reimburse their friends by making a bank transfer within the app, thanks to some help from its partners – in this case, banking-as-a-service provider Aion Bank, which runs on Cloud-native, fully API-based banking platform Vodeno, and payments giant Mastercard.

“It’s a good example of a partnership, where every one of us had his or her particular role,” explains Kim Van Esbroeck, country head for Belgium at Aion. “There was Tricount, being the frontend application, having the community of several million users and being the face and the voice towards those users. Then, moving back in the chain, Aion and Vodeno provide the gateway to link the users in the Tricount application with the Mastercard open banking platform “Mastercard serves as the backbone of everything and ensures that reach, so consumers can do payments among all Belgian banks, and, in the second phase, Luxembourg banks.

“We work together, in order to offer everything in a one-click user experience. So, at our end we have integrated three different parties, but for the consumer it’s a seamless, one-click experience to transfer money to their friends.”

Van Esbroeck hails the latest Tricount upgrade as a perfect example of how open banking and banking-as-a-service (BaaS) can help companies innovate. Aion is hosted on the Cloud-based Vodeno platform, which provides core technology to banks and to electronic money institutions. It enables the bank to also offer BaaS options for other banks and non-banking entities, such as Tricount, alongside more traditional financial services.

“At our end, we have integrated three different parties, but for the consumer it’s a one-click experience to transfer money to their friends”

Kim Van Esbroeck, Aion Bank

The promise of BaaS is that it enables brands of all kinds to integrate financial services in their journey to make the life of consumers easier, says Van Esbroeck.

“That’s what we do with Aion, in combining Vodeno, a fully Cloud-native, 100 per cent mobile, API-based technology provider, with the European banking licence of Aion. This combination of technology and banking licence makes it literally a bank in a box, offered to regulated players, but also to non-regulated players, that don’t have the expertise or the knowledge themselves but are, in that way, able to offer banking to customers.”

In Tricount’s case, open banking enabled the company to offer payments and focus on what it does best, without having to wrestle with the technology and regulation, says Jonathan Fallon, Tricount’s co-founder.

“We can focus on our core offering, which is good-looking, usable, simple, consumer-facing products, while not having to take responsibility for the more technical, regulatory work,” he explains. “We can have partners for that. It’s really important, as a start-up, to stay focussed on what you do well, and that’s precisely what we aim to do with this partnership. It was a natural extension to offer a settlement feature from within the app.

“At Tricount, we have always been neutral, meaning we want to offer our service to a larger amount of people, so it was important to have something that was bank-agnostic,” Fallon says. “Open banking and the revised Payment Services Directive (PSD2), in this context, seemed a promising fit. So it was with great enthusiasm we partnered with Aion, Vodeno and Mastercard to make it happen. And the success is there, we can see people are using it and it makes their finances easier to manage.”

This rapid evolution in co-operative financial services is also attracting the likes of more established industry players.

“Our philosophy is to look beyond just cards to what’s popping up and whether we can play an interesting role,” says Henri Dewaerheijd, country manager for Belgium and Luxembourg for Mastercard, which has been building an ecosystem of alternatives to its traditional card payments business for some time, much of it through partnerships. Its recently expanded Mastercard Engage Partner Network aims to give businesses easy access to technology partners that can quickly build and deploy open banking solutions
for payments and lending decisions at scale.

Meanwhile, its Fintech Express programme provides startup and emerging brands with a suite of tools and resources to enable them to innovate in payments and scale their business by leveraging the ‘power of partnerships’. Indeed, it was this very initiative that facilitated the latest Tricount launch.

“We see that technology is evolving very fast,” says Dewaerheijd. “There is regulation, there are new possibilities, whether that is with open banking, or whether that is with instant payments, where the card rails are not the only rails around anymore; there are other solutions that are interesting for consumers and are interesting for companies. And giving different solutions to the partners that we work with is our objective here.

“We don’t want to rely on just one rail, we want to become a multi-rail company; open banking is one of those rails.”

Solutions enabled by open banking aren’t limited to payments, of course. Aion, for example, has used open banking to enable some of its clients to determine a consumer’s creditworthiness. If a customer wants a loan, Aion can use open banking to fetch six months of payment history from an account, and then analyse and assess that data to help decide whether to grant the funds or not. More exciting, and quite possibly revolutionary, is Aion’s project with German-based UnitPlus – a partnership that also involves their mutual friends at Mastercard.

“It’s really important, as a startup, to stay focussed on what you do well, and that’s precisely what we aim to do with this partnership”

Jonathan Fallon, Tricount

UnitPlus’s unique selling point is that it lets customers put money in an exchange-traded funds (ETF) investment portfolio that is linked to a Mastercard debit card. This means UnitPlus customers can make payments directly from their investment account, breaking all the traditional rules of separation in banking.

“For the first time, we are linking a classic payment instrument – a Mastercard debit card – with an investment portfolio, where you have higher margins and higher yield, instead of the card being linked to money in a current account where it’s earning no interest at all,” explains Aion’s Van Esbroeck. “But you use the card just like you would an ordinary debit card.”

It includes an innovative ETF-back reward feature, too, which gives users 0.1 per cent of their purchase value back in ETFs to reinvest in their portfolio, the app keeping track of tax settlements and providing users with a view of deposits and withdrawals. There are a growing number of use cases for leveraging open banking in sectors such as retail, where embedded payments and a smooth customer experience have been shown to increase revenue and boost spending per customer by two to five times. Payments are a key interaction point for many companies, and an obvious moment to reinforce brand messaging.

“People make payments every day and if you associate your brand with that transaction, you are a lot more top of mind, you are a lot more present, and that’s really important,” says Mastercard’s Dewaerheijd.

The key to opening up these various opportunities is BaaS.

“It is essentially the missing link to drive innovation in finance and payments. With BaaS, you don’t have to be a bank to be in payments. This is the big revolution,” says Dewaerheijd. “With BaaS – which essentially socialises the investment in infrastructure and the licensing part – the hurdle to launch your own solution is a lot lower.

“A lot of companies can now get into the market with a Mastercard and an IBAN account, in a matter of months. That’s really innovation at warp speed.”

What remains to be seen is whether banks embrace this model where the backend and frontend are often essentially run by different partners. But doing so could help them innovate their own services for both their own and their customers’ benefit, says Dewaerheijd.

“Banks are very dependent on their legacy. Their IT roadmap today is dominated by compliance, by regulatory products and they essentially don’t bring a lot of value to their clients. So, instead of having banks in Europe working on the next iteration of PSD3, this could be socialised, leveraging BaaS, and banks could free up that time to work on innovation, on things that really matter for their clients, which is usability and frontend services.”

Banks – both the long-established incumbents and their digital challengers – could also benefit from a return on their investment into technology by making it
available to others.

“What we’re seeing in our market, is essentially a squeezing out of the smaller players, because they have difficulty following the arms race with regards to technology investment,” says Dewaerheijd. “So is there an intelligent play here, where you keep your core, you keep your positioning towards your client base, but you are able to leverage BaaS to socialise a lot of your investment.”

However to do that, banks need to be ‘reachable’ and outsource a complete financial services package, adds Aion’s Van Esbroeck. Clients must be able to reach the bank through APIs and issue cards, grant loans, etc, on demand. She warns a lot of work still needs to be done on that front.

“BaaS essentially socialises the investment in infrastructure and licensing – the hurdle to launch your own solution is a lot lower”

Henri Dewaerheijd, Mastercard

“A lot of traditional banks are not even at that point of delivery of their own services. Banks who have the ambition to go into that area really have to focus on technology.”

Time is increasingly of the essence and this is where BaaS proves invaluable, Tricount’s Fallon points out. As well as more products now being available, there is a notable upshift in quality, too.

“If you had to do a PSD2 payment 18 months ago, you’d have needed your card reader, you would have needed a lot of complexity that would actually make the use case barely usable. It was a challenge for the project we implemented,” says Fallon. “So, beyond the fact that there are more product offerings, the quality has really improved. That’s important for start-ups that are really focussed on the user-interface.”

BaaS also allows players – be it a startup who desires to become a fintech, or a large corporation wanting to offer banking products – to move faster and experiment more.

“For a startup in particular, it’s very important to find your product’s market fit fast, so this will really help foster innovation,” adds Fallon.

It also reduces risk and development cost. So, overall, Fallon’s advice to other companies moving into payments and financial services is not to reinvent the wheel, but take advantage of the expertise in delivering services that already exist.

“You have banking players that are good at what they do. As a start-up, or another company, with another core business, you are good at what you do. Focus on your UX, your simplicity. Make sure you are not becoming another company that has to fit to complex banking regulation, technical banking flows,” he says.

Tricount’s in-app settlement feature is only available to customers in Belgium and Luxembourg at present, but the company is seeing strong interest for it among users in Spain, too. No doubt, it will soon be looking to buddy up with a local partner there to create solutions that make consumers’ hearts sing.

This article was published in The Fintech Magazine Issue 25, Page 136-138