Credit scoring startup Nordigen has launched a new open banking API to solve the issue of expensive solutions in the market, taking a swing at companies like Tink and Plaid in the process.
The company, which bagged €700,000 in funding in 2018, argued that very little has been made to ensure that open banking data is free and that businesses can be connected to an official bank APIs, which is mandated by PSD2.
“In practice, open banking in Europe is still a hot mess,” Nordigen said in a statement. “Navigating between PSD2 licences and certificates, connecting to the regulated open APIs, and deciphering third party account aggregators and tech startups is time consuming and expensive.
“Accessing the free data today is taxed. There’s no real ‘try before you buy’ with open banking in Europe today. It’s ‘pay to play,’ and it’s less than ideal.”
The new Nordigen API, called Account Information, is connected to major European banks and provides regulated, consented access to user banking information from a few months to several years.
“As part of the free offering, Nordigen, an authorised AISP, will also offer 90-day connectivity to user’s bank accounts with background refresh up to four times a day,” the company said. “This means no more upfront commitments and no hidden costs, just free access to PSD2 data.”
There are several other companies offering similar solutions, but for a price. Nordigen argued that it would be able to provide an alternative to these APIs, which it said “are costly to build and maintain, causing incumbents to charge a lot of money for access to open banking data.”
“Nordigen, however, connects to free regulated PSD2 APIs that are constantly improving,” the company claimed. “This allows us to have a significantly less expensive technology stack while reducing any friction for businesses to connect to open banking.”
Nordigen is not the only FinTech venture to have expressed a slight scepticism about open banking.
Monzo’s founder and president Tom Blomfield said earlier this year that the “positive effect of open banking on innovation has been nil.”
“I don’t see any businesses based on open banking in Europe whatsoever,” he said, despite open banking rules officially being introduced into the EU’s FinTech landscape in 2018 as part of PSD2.
That being said, Monzo did announce that it would introduce a new open banking feature in July, making transfers between the neobank’s and other banks smoother.
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