On January 27th the birth of A78 was announced. A78 is an interest group initiated by Cake, the app founded by Davy Kestens, “that wants to make banking profitable again”. The new initiative A78 will be chaired by their head of legal Yves Bovin. Coincidently, The Banking Scene had a call scheduled that day with Davy and Yves to evaluate PSD2 from the fintech side of the spectrum.

A78

The idea behind A78 is to unite all Belgian payment institutions that are licensed to provide payment initiation services and account information services. Currently Cake, Accountable, Digiteal, Exthand, Ibanfirst, OkiOki and Toco are members of A78.

For me, A78 didn’t come as a surprise and I definitely don’t see it as another fight in the liberalisation of data. Banks are confident their APIs work properly, Fintechs complain they do not get the expected results. The National Bank is moderating in between, not really knowing what’s going on technically. Banks can speak in one voice through Febelfin, Fintechs don’t. In conclusion: A78 makes perfect sense.

The easy debate is, of course, the statement that APIs work, or not. Unfortunately, it is not that easy. APIs is one thing, connection to the bank platform another.

The Cake app went live on January 31st, immediately with the remark that ING, BNP Paribas Fortis and Argenta will not be supported. That is surprising because according to Argenta, they got an exemption from the National Banking of Belgium, meaning their APIs were approved.

So, for me, this doesn’t show APIs don’t work, it only shows that there is a lot of confusion in the market that needs to be resolved, both on the interpretation of the law, and on the technical implementations.

A78 short term goals

A78 is an answer to this confusion: to facilitate the communication between the different stakeholders as A78 now is a single point of contact for parties such as Febelfin and the NBB.

Offering an API is easy, offering easy to use APIs isn’t always that easy. This should not come as a surprise: it is a new business for all. There are 2 entry points of APIs, 2 interpretation of how they should work.

For most banks, PSD2 is still a compliance project that needs to be flagged. In the hierarchy, the message goes up that everything is fine. The same thing happens at the Fintech side, and we get in a yes-no situation where no one is happy.

Open communication amongst equals is essential to make Open Banking work as we learned in many of the Open Banking Interviews.

Aside from the technical aspect of PSD2, there is also the interpretation of what should be made public with APIs. Fintechs like Cake build a model on someone else’s data. If the sources of these data have different interpretations of what PSD2 requires, it gets very hard to build a solid, trustworthy business model.

A few concrete frustrations are:

• is PSD2 only for adults?
• do you need multiple signatures for sharing family accounts?
• how much data should be sharing, how far should the bank do back in history?

According to Davy, all Belgian banks are today limiting the sharing of data to 90 days of transaction history, instead of sharing “the same as what they get in their mobile banking app”.

These questions have not all been answered in PSD2, and thus: they’re open for interpretation. It seems like these are diverse now. The problem with building on PSD2 for new businesses is that the 80%-rule doesn’t count: mining data in favour of a customer means you need good data, not ‘good enough’ data. Otherwise, the model doesn’t work.

A good argument for more collaboration was that idea that Cake-like companies, in other countries are getting a head start if they are in an API-ready country. Finetuning data models the right way will make or break the future of fintechs like Cake. So instead of playing “bank against fintech”, a more patriotic approach of Belgian collaboration would make more sense according to Yves and Davy.

Again, A78 is not a blame game, but rather a facilitator to a more open communication and alignment between fintech and banks. The interpretations should be more aligned because otherwise, PSD2 is useless. A78 is therefore in the process of drawing up an objective checklist that makes it possible to assess the quality of an API. This should help to align everyone in the sector and eliminate ambiguity.

We heard a lot of goodwill from the banks in the Open Banking Interviews and we also heard that there is still a lot of learning to be done within the industry. Let us hope this will accelerate it!

A78 long term goals

On a longer-term, the aim is to extend A78. Today only organisations that offer payment initiation and account information services are in scope (all players working under license 7 and 8, hence the name A78). On the longer run, it should be open to all payment institutions (including those with permits 1 to 6).

Different licences, different topics to discuss. Payments Institutions have other interest than banks, which are speaking in once voice through Febelfin. A78 wants to provide the same value for Payment Institutions. From the moment A78 is transformed into an association, the communication with Febelfin should go much easier.

Today A78 is in the good hands of chairman Yves Bovin. Once the association is fully on track, an independent chairman will be appointed. Someone that has the required time to make an association of payments institutions a success.

Open Banking long term

Suppose A78 fulfils the expectations and PSD2 APIs are understood the same way by all parties, alternative data harvesting will still be required today, according to Davy. After all, savings accounts or investment accounts are not in the scope of PSD2 in Belgium. Davy’s wish is that banks will also quickly start building public APIs for these alternative accounts because it is safer.

“If banks want to prevent fintechs from screen scraping, they should be building their APIs in such a way that it is more convenient to connect with the APIs than to scrape the screen”.

Cake app has just launched in Belgium as an open beta. This means that the current version is, and will remain for the coming months, still a limited version of what Cake will be able to do in the future. Testing the bank API’s will remain one of the important objectives of this open beta.