The European Payment Services Directive 2 (PSD2) ignited massive fintech innovation for consumes over the past few years. And yet real fintech progress for startups and small businesses remained negligible.
Hence, let’s find out what this regulatory shift will do for startups, and small and growing businesses.
Open banking allows any licensed third-party service provider to view transaction data upon user consent. Historically, access to account information was limited to the bank managing the account. Calculating your credit worthiness few years ago meant cumbersome plumbing of data channels to the banks who have the account information. Today? Connect via PSD2 and let the algorithms do their thing.
With open banking, access to account information is democratized. While first-wave fintechs all went for the retail long tail with large volumes, we think small and growing companies have been left out of the equation.
In our view, this is the future that startup and small business CFOs should expect:
1. Next-gen Ebanking with all bank accounts in one place
Juggling multiple bank accounts is extremely time-consuming. Try searching for that one transaction in your 7 bank accounts. Or the pain of spotting duplicate payments across different IBANs. Or your accountant charging you tons for conducting an audit of historical transactions.
Using a single source for all bank accounts inevitably leads to better visibility and control over founders’ banking operations without locking them into just one bank.
Large corporates have been enjoying this functionality for decades (through expensive custom bank plumbing) but now we can deliver this to all entrepreneurs.
2. Consolidating financials in real time
None of the founders we talked to had an ad-hoc insight into their company’s liquidity within one mouse-click. And yet, it’s so vital to manage resources daily and to inform time-sensitive business decisions. Until now, this is a major disintermediation of running any company.
By aggregating all information in one place, founders get real-time insights into cash flows, liquidity levels and plan variabilities. Seeing aggregate income and expenses as they happen instead of having to wait for monthly statements and manual spreadsheets is the way to go!
3. Enhancing security with multi-user permissions
This is particularly important. No, we are not judging that you shared the bank password with your finance associate on a post-it — but let this be a gentle reminder to please update your credentials right now. The same goes for the credentials to all your bank accounts that you hide on a note below your keyboard.
Multibanking does not just allow accessing multiple accounts through a single interface for you, but also your most trusted colleagues.
Password management for all bank accounts is a thing of the past with multibanking. Strict regulations on Strong Customer Authentication (SCA) ensure that your bank information remains secure and in your own hands. At Airbank, we created an advanced system of multi-user permissions to bolster verification measures. These enable individual and team-level read & write access rights, best-practice review processes, and automated intances that trigger approvals.
We believe banking shouldn’t cloud your oversight but inform it.
4. Integrating seamlessly with Third-Party Services
You know the pain of accessing third-party services if you ever wanted to transfer cash internationally while avoiding a super expensive SWIFT transfer.
From foreign exchange to treasury management, finance needs a multitude of apps and independent service providers to manage a business’s work.
Open Banking allows true versatility: By integrating third-party services into Airbank, we give users access to the tools and services they need. Without switching applications. For example, a business paying a supplier in Asia uses our Transferwise integration for the foreign currency payment at the best possible exchange rate.
And that’s just payment. Imagine the possibilities in when using Airbank for revolving credits, lending, revenue-based financing, insurance, payroll, or accounting. Third-party services enhance the customer experience and empower finance teams to manage their business through a single interface.
5. Automating bank reconciliations
How do you know whether internal transfers between two of your own accounts actually settled, or whether this one payment has not been sent twice? Large companies perform regular bank reconciliations to spot any failed bank transactions — and yes, they do occur.
Traditionally, the process of bank reconciliation is time-consuming and error-prone. But today nothing stops us anymore from automatically cross-checking data points across all your bank accounts to power automatic bank reconciliation, invoice matching, and alerting you of failed bank transactions. Needless to say, your accountant will love this too.
So with what does this leave us?
If you couldn’t guess from the above: At Airbank, we are working hard to make this future a reality for all startups as well as small and growing businesses. Feedback from our first users is incredible— and a great validation that it’s not just us that want their finances tidied up.
If you are a founder or CFO at a small or growing business, sign up to our waitlist today and we’ll give you priority onboarding as soon as we roll out across Europe. We can’t wait to show you around!