Stefan Weiss is the head of APIs at Fidor Bank and is responsible for Fidor Bank’s international API and in-account app strategy, product management and building an ecosystem around Fidor TecS software and services.
At Sibos 2015 in Singapore, Stefan talks to me about Fidor’s approach to APIs, and how its open API strategy has led to success.
We all look at Fidor as an icon; as an example of what a challenger bank can be. Can you explain a little about how it all started?
Fidor started as a community, and was formed when people got together to discuss what a future bank should look like and the problems with the current banking system. Fidor Bank was based on this knowledge obtained from the community. Fidor Bank was founded in 2007, and the community is still a very important part of it. This is why we call it community banking. We use the community in many ways, and one way is to discuss major decisions with our customers before we actually do them, to give our customers an important role in decision making. This is probably one major difference from other banks.
Several banks are now opening up APIs, or are planning to in the near future. Yet, you’ve been doing that for years.
Well, API is nothing new to banks. They have hundreds, sometimes thousands of APIs to 10,000 to 100,000 customers exchanging data. The difference is with the API approach that we follow, and which we believe is the future. Our APIs are standardized, open, modular and extensible. Everybody who wants to use the API can simply open an account with the bank. With the documentation available, if you’re able to do some simple PHP coding or whatever, you’re able to connect to the API and connect your system to ours in a very easy way. Within hours, systems can be connected to our APIs, and that’s the big difference. Existing banks have APIs, but it takes them probably weeks or months to provide new APIs to new customers, and not everybody gets one, so that’s a key difference.
In the context of regulation (for example, with PSD2), all European banks will be required to provide some kind of interface to give access to their data. It’s up to the bank to do what is absolutely necessary and risk being just a data provider, or commoditized.
Would Fidor change in any way because of regulations such as PSD2?
I would say we are probably the first bank that’s already PSD2 compliant, so no, we don’t feel pushed by it at all. We see that we are on the right track and we have our head-start, and we have already realized that just giving access to existing data isn’t what the market needs. It will actually save the bank for the future. But what is needed is the availability of value-added services provided by APIs – and powerful APIs that can be used by not just our customers, but by service providers – to reach their end-customers. So we all need to build up a marketplace and platforms that have much more leverage than just giving access to existing services.
That’s a valid point because most of the banks don’t think about creating a platform for startups for future use; it is about complying with regulations, at the end of the day.
Well, the point is we have this open API strategy where everyone who has an account with Fidor can use the API to access his account and the main services of the bank. But, in addition to that, if you’re one of the poor people that doesn’t have an account with Fidor yet (I heard that there are some left!), you can still have full access to the documentation, the Sandbox within our API manager and simulated accounts, where you can simulate, test and get to know the APIs’ capabilities without actually having an account. But when you want to access your account, you have to have your account in the system, so both are possible. This availability of APIs in the Sandbox for testing, debugging, and learning is what we think is a truly open API.
What were the challenges you faced in terms of entering this market and building this open model?
It’s like any other product: it has to be marketed and it has to treat developers as customers, treating them with respect and giving them reliability and information. It’s what every other bank customer, in particular a corporate customer, would expect from any other ordinary bank product. We have to take this seriously, and that’s what we really try to do, and that makes the biggest difference. I don’t see other banks trying to market APIs yet. Banks probably had other ways of accessing their services normally and are now saying, OK, we see the potential of giving API access but without trying to open it up.
You actually have a lot of successful companies using your API.
Currency Cloud, for example, and so many other local, national, and international companies are using the APIs. Each week, a new company uses our APIs, and it’s sometimes hard to manage it. I love it because it’s open, where everyone can use it, test it, try it and then only at the last moment, when he really wants to access his accounts, do we get a notice about it. I had situations where big corporate customers were totally up and running, had prepared and tested everything, and it was just late in the evening I got a mail. So I just checked everything, acknowledged and then they were up and running in under 15 minutes! This is the power of standards without being dull or ‘one size fits all’, and it’s something that I said in my presentation as well: that standard doesn’t mean that everybody has to live with the same set of features.
It’s fascinating that you tried such a different way of working well before all the fintech conversation happened.
Yes, and it will evolve. Many companies come to banks and say ‘can we do this?’ and at Fidor, they say ‘can we do this with our APIs?’. In most cases, I say yes, of course. That’s easy. The more critical part always (or in most cases) lies with regulation, legal issues, money laundering, and so on.
You are truly passionate about APIs!
Absolutely, and I like to share what I’ve learned in recent years. Our advantage is that we’re not only a technology company that always tries to be ahead of all developments and try out new things, but we’re also a bank. We have this license, so we can make things possible that others who just do fast things with APIs just can’t do, or need a bank to do it. We have both. This is an advantage, and sometimes it’s a disadvantage as well, because we are a bank – we cannot do everything just because we would like to, and we always have to consider the regulatory implications. We have almost 100,000 customers who rely on us and trust that their money is safe in their accounts, so we always have to balance this. They are with Fidor Bank because they love the brand and they love our approach to how we get along with people, and they know our technology aspirations, yet still they expect us to be very, very serious and very honest about what happens to the money they have in their accounts. They expect us, of course, to operate like any other bank, and that’s something we cannot lose.
Now that you’ve launched in the UK, is Fidor planning to expand to new countries?
We always have plans for expansion. We expand in several ways. One is with our own subsidiaries, like now in the UK. We then have partnerships in the queue, like we have in Russia and in the US. Then we have white label partners that come from completely different industries and want to offer banking services to their existing customer base. Yet another way is that we white label and license our technology that will be used by other banks to set up their own brand. This is how we will come through and rule the world some day.
What do you think are going to be the three major trends in fintech next year?
API is, of course, one of the major things, and blockchain will be probably even more important than it is at the moment. Hopefully, particularly in Germany, we will see more mobile payments, at least at auctions, and probably some standards.
Main image: Stefan Weiss at Pirates of Banking Developer Day in Munich, 2015. Fidor Bank.