How to Select an Account Information Service Provider (AISP) for Success
Account information service providers (AISPs) are at the forefront of open banking. They are enabling numerous companies to better serve their customers and provide new innovative payment-related offerings that previously would have been unthinkable.
We spoke with Rasmus Gramer, Connectivity Expert at Brite Payments, about recent developments in account information services and the opportunities they provide businesses. Plus, what businesses need to know when successfully selecting an account information service provider.
Why should more businesses use open banking-powered account information services (AIS)?
Rasmus Gramer: We live in a digital world which requires digital solutions. And AIS enables businesses to utilise new tools that are fast, transparent, and democratic. By breaking into the power and monopoly of traditional banks, businesses can now gain access to reliable information. Banks do their part, complying with legal requirements and collecting data, but the advantage lies in companies using the information supplied by AIS easily and reliably.
Businesses can use the information received through AIS as a foundation, building upon it for added flexibility and offering unique products and services.
What makes open banking-powered AIS reliable and secure? Is it solely because it’s through the banks via their API?
Rasmus Gramer: Exactly, it starts right with the banks. They adhere to strict requirements from the beginning, establishing trust. AIS is not some form hastily put together online without proper checks and balances. On the contrary, thanks to the EU’s second revision of the Payment Services Directive (PSD2), there are clear requirements for both banks and third-party providers (TPPs).
What’s the best use case of account information services you’ve encountered so far?
Rasmus Gramer: Since AIS focuses on banks and their operations with accounts and payments, a notable use case involves handling account numbers or IBANs. In many European countries, these numbers can be lengthy. Personally, I don’t know my Swedish bank account number by heart! And compared to some other countries where I have bank accounts, like Germany and Spain, it’s a relatively short IBAN.
The same goes for credit card details. Quick access to this information, especially when not stored on my device, is incredibly convenient. This use case simplifies and speeds up tasks like checking your account status for online purchases or other transactions. Plus, with AIS, you typically get access to current balances, which could be handy for customers.
However, this industry is still relatively young, and I anticipate discovering even more innovative applications.
How can businesses and customers benefit from third-party providers’ (TPPs) account information services?
Rasmus Gramer: Since gathering information through AIS with the help of a TPP is a digital and automated process, it’s faster and requires less effort than manual documentation or paperwork. This time-saving aspect, coupled with reducing the risk of manual and human errors, is hugely beneficial for companies looking to use AIS.
Additionally, you can use AIS as a foundation and overlay statistics or data from other sources, presenting it more visually appealingly and identifying patterns. Younger and often more agile companies, like Brite, can provide more in this area due to fewer restrictions and a higher degree of flexibility, unlike banks.
Do customers benefit because TPPs aren’t burdened by legacy systems that traditional banks face?
Rasmus Gramer: Exactly. It’s in their interest to offer new and innovative services. And these types of products are barely provided by banks, either.
How do account information services specifically help businesses manage risk?
Rasmus Gramer: By providing reliable data directly from the banks via a reliable and secure API, businesses gain access to accurate information. For example, Brite integrates with all of our banks and their different APIs, standardising it into one API for merchants to use and apply easily. This direct access ensures that the data is trustworthy not sourced randomly from customers. When businesses accumulate this data, they can identify patterns more quickly than with manual methods. This also enables them to assess risks accurately, ultimately reducing risk.
How do you see the use of AIS progressing next year and beyond, considering developments in open finance and similar areas?
Rasmus Gramer: While typical use cases like the one I mentioned are prevalent now, more industries and businesses, not just direct finance companies, will leverage AIS due to its numerous benefits. After all, it streamlines processes involving manual documents and customer queries, resulting in more accurate data.
Moreover, as the industry evolves, and open finance becomes a reality, I envision new applications emerging. For instance, personal finance applications could provide smart suggestions for money allocation based on spending patterns. If a user consistently has surplus funds, the app might recommend saving or investing, and vice versa.
What types of AIS does Brite offer?
Rasmus Gramer: Of course, the first use case, the one that I touched upon previously, is basically to fetch account details, which then can be used for a payment but possibly for a payout, too.
Then, Brite has another use case, which combines AIS and Know Your Customer (KYC) collection and payment. We use AIS to authenticate and identify the customer for onboarding and a payment initiation service (PIS) to make the payment. This means a customer doesn’t have to register in the typical or traditional way. Brite enables users to create an account, pay, and log in. Thus, Brite is both a fintech and a regtech company! The brilliant part is that returning customers can use the AIS standalone to log in directly, quickly and comfortably.
And the last one is a new thing we have started exploring in selected markets. AIS can provide some access to transaction data, which means a customer can give a business permission for both them and the business to have a 360-degree view of their account.
This enables affordability checks, which allows customers to see if they can afford a financial product, for instance, finding the suitable lenders with the best interest rate for them to benefit from. For consumer lending, that kind of information is beneficial for lenders and customers.
What makes Brite’s offering so unique?
Rasmus Gramer: This whole open banking area is still relatively new and requires a specialist understanding to make it simple for businesses to use this technology. Brite is a young company, a second-generation open banking fintech, and our AIS products use only the most modern security technology.
Likewise, we are not reliant on legacy technology platforms and are designed to be flexible to our customer’s needs. In particular, Brite’s technical depth makes it easy to expand across markets and offers good scalability for growing brands.
When selecting an account information services provider (AISP), what should I know?
Rasmus Gramer: It’s not just about the price. It’s nearly always a trade-off between going with a player that can cater for your needs and one that won’t. If you go with a player with an uncertain reputation, they might not be able to treat you well or, in some cases, even tailor their offering for you.
Likewise, if you want to cover more countries, you should look for a partner with coverage, offering the flexibility your business will need to grow. Often, buying an off-the-shelf solution just doesn’t provide that.
Another thing, with the advances in technology marching ever forward, is that the use cases that some businesses will have are unique, and AIS will need to be adapted to them. Some AISPs are too rigid and often will not have the flexible options some businesses need – always check this. Working with a provider that understands a customer’s needs and, in some cases, speaks their language both literally and metaphorically is incredibly useful. At Brite, for example, we have an experienced team from different backgrounds at all company levels.
