How TrueLayer is helping fintechs bring open banking to Ireland

2 Jul 2020

Francesco Simoneschi, CEO of TrueLayer. Image: TrueLayer

TrueLayer’s Francesco Simoneschi discusses the potential of open banking and how his company has helped Revolut and Olivia AI introduce these features to the Irish market.

TrueLayer is a London-based start-up that helps fintech companies verify accounts and connect their apps to bank data. Following the introduction of PSD2 in Europe, the company’s services have been adopted by companies looking to take advantage of open banking. TrueLayer has recently launched its services in Ireland, with Revolut and Olivia AI using its tech on their platforms.

Though it is still early days, Francesco Simoneschi, co-founder and CEO of TrueLayer, told that he feels there has been a negative narrative surrounding open banking.

“Much of this is because when you’re dealing with a traditional industry, such as banking, I think there has been a lot said about the inability of banks to meet timelines and deliver something that works, or their inability to be friendly with fintechs,” he said.

“The reality is that there are enormous challenges when it comes to getting banks to collaborate, but this is happening and it’s happening for real. We are very happy to see the tide turn.”

We spoke to Simoneschi more about this, the work that TrueLayer does to support open banking, and why he thinks consumers should feel confident about data security in this new era of banking.

‘Open banking was established with the goal of opening up the market’

In a nutshell, what does TrueLayer do?

We enable app developers to easily integrate with all of the banks that expose an open banking capability, pretty much everywhere in Europe. We want to make open banking really easy for developers to integrate apps with.

What do you think open banking will mean for Irish customers?

If you look at why open banking has been established, it’s to create more competition. When the data and information belonging to customers is locked inside a bank account, there’s a lot of friction for new players to deliver a competitive product and provide more control or visibility over the financial lives of consumers.

Open banking was established with the goal of opening up the market. What we can help companies to deliver is a new generation of digitally enabled financial products that can integrate with your existing bank account. It’s very much about consuming the data that everyone produces as a by-product of their activities with their banks. This data is very valuable to understand how you’re spending your money and how you can do more with your finance.

There are third-party companies that can use this data to build financial insights and products that can help you to save money, invest and just do more with your finance, overall. A good example is two of our first customers in Ireland – Revolut and Olivia AI.

Olivia is helping people to spend smarter and save money, and they’re using our API to build on that proposition. Same thing for Revolut, which is using us to enable a deeper level of financial insight and account aggregation for their customers.

Revolut has raised significant investment in recent months. Why do you think it chose TrueLayer’s technology instead of building its own API?

That is a very big technological task and project for any company. In Europe, there are tens of thousands of financial institutions which you may want to connect to. There are several technical standards in the market and banks are also following the standards in different ways.

You need an aggregator, somebody who makes it work at scale and removes the friction on your behalf. It’s about creating a consolidated open banking infrastructure in Europe. We know the intricacies and we know how to navigate that. Companies that are very product-focused or customer-centric, they like to focus on their customers and not have to worry about building infrastructure.

When do you think we will see the full potential of open banking?

That is the great question. When we look at the UK, I’d say that is already happening and it’s growing by double digits month over month. We have seen more specifically a lot of traction on the payments components of open banking, on top of access to data.

I do expect that Ireland will follow a similar path. Compared to the UK, Ireland’s probably slightly late to this because the compliance deadline was different.

Since we launched a few weeks ago, we’ve seen 30,000 users in Ireland using open banking through Revolut and Olivia AI. This is a good first step in the right direction.

I think payments is going to be the killer use case of banking. It’s about liberating the money in your bank account to be easily moved and connected to a wealth of financial applications, enabling customers to do more with their money, but with the security of having a very strong authorisation and consent model that also encompasses biometrics.

What would you say to consumers who might be hesitant to try open banking due to data privacy concerns?

I don’t want to downplay those concerns because I think they are valid. If you look at recent history, there has been increasing attention towards privacy and concerns over data that is shared digitally. I’m not going to downplay the fact that every single participant in the open bank economy needs to step up to these challenges.

There are some positive elements. This is a regulated industry, so you don’t just turn up one day and say, “I want to access this data or move money”. We all have to adhere to security and compliance regulation that has been mandated in Europe and also specifically from the Irish regulator. On that front, this is a highly scrutinised and highly regulated industry.

The second part is that when the industry formed, both European and UK regulators decided to implement some very high standards for security, especially when it comes to collecting user consent, which is a key element of this regulation. That happens with the consent of the user, with their biometrics through a mobile application.

For comparison, this is a higher security processing procedure than everything we have seen, including credit card processing. With credit card processing, they don’t implement this additional security that open banking has decided to build from very early on.

When we look at PSD2 in Europe, it’s starting to look like an increasingly successful regulation. A huge amount of work has already been delivered and now it’s about innovating and growing fast to deliver those benefits to consumers.

Kelly Earley was a journalist with Silicon Republic