Mar 08, 2021: Open Banking Accounting w/ Freshbooks

Written by Dragos Cocosila

Happy International Woman's Day from Banq! We have a lot to share this week as part of our passion to continue providing you with industry-leading information on the global Open Banking segment. This update will have the weekly additions to the Open Banking Tracker (Banks, APIs, TPPs, etc.), a look at how Open Banking is fueling the growth of accounting platforms, and João Bezerra Leite's insights into the Open Finance revolution taking place in Latin America.

Accounting

Our Current Coverage

  • • We track 2,765 banks providing Open Banking services! (+1 from last week)
  • • 1,015 APIs currently tracked on our platform!
  • • 404 TPPs in the ecosystem!
  • • 86 Global markets covered!
  • • 35+ Open Banking API Aggregators! (with more coming very soon...)
  • • PSD2 API & PSD2 Open Banking coverage!
  • • Track over 60+ data points for all Open Banking projects!
  • • And we are growing on a continuous basis... 🚀🚀🚀

Developments (Mar 2nd to Mar 8th):

We initiated coverage and provide Open Banking API information for:

  • Neon: A digital bank that offers credit cards, personal loans, and investment products, among other services in Brazil.
  • • Biggest Publicly Available TPP Registry in the Industry! 🚀🚀🚀
  • • And many more!

We continue to cover over 35 aggregators!


Open Banking Use Case Spotlight: Accounting w/ Freshbooks

As Open Banking spreads further into the financial services market for SMEs, tech-forward accounting platforms are capitalizing on this trend. Real-time bank feeds become essential digital links for accounting and invoicing, ushering a new era for digital accounting applications. In their partnership with SaltEdge, Freshbooks has a vision for how Open Banking technology will transform businesses and simplify critical processes for clients. Aiming to help millions of people worldwide save countless hours prior wasted on billing and invoicing in spreadsheets.

The accounting software market was valued at USD 12.01 billion in 2020 and will grow to an expected USD 19.5 billion in the next five years. The recent digital environment advancements allow Open Banking to become a driving force behind the accounting software market's exponential growth. Choosing the right accounting software is crucial for smaller business owners or freelancers because invoicing and accounting apps offer smart and cloud-based features to monitor and understand business finances like never before.

More than 24 million people have processed billions of dollars through Freshbooks’ easy-to-use invoicing, expense management, time-tracking, and online payments platform. Using Salt Edge’s bank data aggregation service, FreshBooks can help business owners scale across Europe by ensuring that their books are accurate and organized and saving them time. Now FreshBooks’ business customers can connect their EU bank, credit accounts and have their financial data automatically imported straight into the software.

What is the key takeaway …

What makes Open Finance such a fantastic industry is because it brings simplification to the most tedious tasks. By connecting your financial streams directly to your accountant, complexities can be solved in real-time rather than retroactively. Open Banking and Accounting was a match made in heaven, and we’re glad to see Freshbooks and SaltEdge take such a proactive step.


Open Finance in Latin America

This week we had a chance to pick the brain of João Bezerra Leite about the Open Finance revolution taking place in Latin America.

Joao

You spent over 35 years at Itau, what did that teach you about FinTech, and what are some lessons you can share with us from your time there (both personal and professional)?

I joined Itau as a trainee, as soon as I left the graduated as an Electronic Engineer, and built my career supporting the growth of the bank. The organization gave me the opportunity to enhance my knowledge in several domestic and international challenges we faced during the early years, one challenge being the integration of 30 financial institutions that were acquired. I learned a lot leading the continuous Tech and Ops modernization process. Besides that, the bank invested in my career with extension courses in Columbia Business School, Wharton School, Swiss Finance Institute among others.

So, lesson number one. I lived during the glorious time when large banks had the opportunity to build a massive infrastructure that led us to today’s digital world. However, past performance does not guarantee future success. Banks have grew up through consolidations. And tech and Ops worked to make this integration process as fast as possible in order to achieve efficiency. And the lack of an organized tech design led us to today’s monolithic “spaghetti banks”, organizations that are very difficult to transform. The Neobanks coming up nowadays, have already born as “lego banks”, organized in modules and API oriented. They need to stop simply digitalizing their secular processes and start designing from scratch, to make a real digital transformation, although this could impact their short-term revenues.

Lesson number 2. Large banks should be “the Financial API Marketplace”. They should connect and make real partnerships with fintechs that have specialized in doing something spectacularly well. It’s impossible to compete. They must join the fintech world.

How have you seen the FinTech market develop over the past 2-5 years? What are the key learnings you’ve gotten out of it?

I have observed the fintech movement for the last 20 years. And I like Chris Skinner’s view that Phase 1 started with Paypal in 1999. It was the Disruption moment. “Let’s kill banks and I don’t care about regulators!!!”. A kind of naïve vision because banks and regulators are there for a reason. Financial systems must be highly regulated to work properly. But many interesting fintechs came up in the market and by 2013-14 they figured out that it could also be interesting to have banks as friends and partners, instead of enemies. That was phase 2, “the discussion moment”, when banks and fintechs got closer, but with very few results. Today, we are experiencing phase 3, partnerships! plenty of opportunities for both sides, given that banks have the money and fintechs have the creative solutions to offer. So the key word is really “smart partnerships”, that will leverage phases 4 and 5, coming from 2023/24 to a frictionless Open Finance world.

What are your views on Open Banking and open finance in general? Anything specific to LatAM?

I predict that the number of Fintechs in Brazil will double in the next 2-3 years following the Open Banking and Fast Payments regulations that have been implemented during 2020 and 2021. New digital players are now taking advantage of the regulations to innovate. In Brazil, digital banking startups, like Nubank, Neon, C6, and Guia Bolso are challenging incumbents with their mobile offerings. And the same happens in Argentina (Ualá and Brubank), Colombia (Rappi and Omnibank), Mexico (Flink and Albo) and in Peru (B89).

To read the full interview with João, please visit the Open Banking Tracker Blog!


Feedback

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Have a great week and stay safe!

The Banq team

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