The fact that traditional banks and young startups dealing with financial technologies do not compete, but rather cooperate with each other for the benefit of their and their customers, has been discussed for several years. For the time being, however, most of the time remains with the words and the banks together with the so-called fintechy rather tap. In the Czech Republic, however, is now opening the first cooperation, which could kick off major changes in the domestic financial world.
Czech fintech company BudgetBakers develops a tool for managing personal finances, into which it aggregates transactions from bank accounts and provides users with clear statistics on its financial flows. A few months ago, a team led by Michal Kratochvíl launched the Board application, which does the same for entrepreneurs.
The principle is again the same – the entrepreneur connects his accounts to the application and then can look at his business from a completely different perspective. The board will show him, for example, the status of the business from the perspective of individual teams, operations or sales channels, including operating profit, costs or outstanding debts. However, this is not an accounting application, as Kratochvíl explained to CzechCrunch in the summer, but a managerial tool to help manage businesses.
“We are pleased to see that there is already a great deal of openness to new technology among new entrepreneurs and startups. They want to keep things under control while saving work as much as possible. And this trend is slowly spreading among entrepreneurs with a longer history”, says Michal Kratochvíl, Executive Director of BudgetBakers.
This connection of bank accounts to applications is crucial for BudgetBakers, because only because of this, users actually have all transactions in one place and do not have to manually enter anything. The European PSD2, which opens up new possibilities for cooperation between banks and third parties to gain easier access to data, plays a crucial role in this respect.
“Banks have so far had a monopoly on their clients’ transaction data, and now they have to share it with the financial technology segment, which is the driving force for financial innovation, thanks to PSD2. This moves the whole segment considerably forward”, reports Kratochvíl, whose company obtained a license from the Czech National Bank in May and can easily connect to banks, as it has so far collected data by so-called scraping.
The catch, however, is that although PSD2 was to be finally implemented this September, it is far from working everywhere. Some banks are already fully open, but many others have only half the solution and some do not work at all. Michal Kratochvíl confirms that the situation is far from embarrassing not only in the Czech Republic, but throughout Europe.
“Thanks to PSD2, in the Czech Republic we have connected to banks that have not been able to do so before. We now have a Commercial Bank or Air Bank. For us, the small fintechs are a struggle, moreover, when we operate globally, every bank counts”, Kratochvíl recalls that while banks have a priority to open their services to third parties usually very low, for small startups it is often a survival, because they have business based on this data.
For comparison, it is worth mentioning that while around the world BudgetBakers are already connecting to some 10,000 banks, in Europe it is still only about twenty banks under the new PSD2 standard – and among them a domestic pair. Kratochvil believes that the situation will continue to improve, but otherwise he must still rely on scraping.
Mutual enrichment
However, it is also possible that BudgetBakers will prove their latest cooperation with Komerční banka. It is one of the most progressive in this area and has already fully opened its tools to the fintech world.
“I consider our strategic cooperation agreement with Komerční banka to be a proof of where the fintechs and banks are heading, but they have just talked about it. I believe that mutual enrichment will now turn out to the fullest and both sides will help each other”, Kratochvíl comments on CzechCrunch. While the bank can offer its large portfolio of customers, fintech will bring new technologies and innovations that banks are often not yet able to develop or deploy.
“Komerční banka has always wanted to be dominant in the area of entrepreneurs and sole traders and we supply them with a modern tool for this segment”, adds Kratochvíl. It will be the entrepreneurs who will now also receive the Board application under various tariffs at which they will be able to connect their accounts and, of course, to use all its abilities. The basic application is free, but unlocking all features is for a monthly fee.
This is still only the first swallow, but Kratochvíl believes that it will not be the last. So far, banks have just been tapping with the fintech, and although they often score each other, when it comes to breaking bread, no cooperation has finally been agreed. BudgetBakers wants to set a new example with Komerční banka and does not prevent cooperation with other entities in the future, especially in the retail area where they have the Wallet application.
Also published on Medium.