It was the first in Europe to offer a free application programming interface (API) for accessing bank account information.
It was a bold move given the money others charge for similar services, and was designed to overcome one of the main obstacles in realizing the potential of open banking, i.e. the highest cost of access to raw data.
It can also help millions get better access to credit.
“We’re right at the beginning, but we’m excited. Free banking data doesn’t have to be expensive, and it’s expensive today,” Rolands Masters, CEO and founder of Nordigan, told Sifted.
“If you were to move from focusing on credit history to focusing on bank data, you would immediately be able to integrate twice as many people into the efficient system. Of credit. ”
Information drives innovation
The advent of open banking regulations across Europe, which went into effect in 2018, has been an important step in the democratization of access to financial data collected by incumbent financial institutions. However, general adoption is still a work in progress, and many are frustrated by the slow pace.
When it comes to areas like credit rating and bank lending, the system is still updated.
Up to 90% of worldwide loan applications are denied. “These numbers can reach 95%, especially now that credit data is very complicated,” says Masters, pointing to the new reality of people moving more and more between EU countries for job opportunities, with their credit history left behind.
“Banks do not find your credit record [credit rating agencies] Experian or SCHUFA, or one of the credit bureaus, so they immediately assume you are not eligible for credit, “he says of the existing model.
There is an alternative. “If you were to move from focusing on credit history to focusing on bank data, you would immediately be able to integrate twice as many people into the efficient credit system.”
Credit to credit date
Nordigan, founded in 2016, is basically a banking data analysis company Masters. “Only now we are also positioning ourselves as a free-open API.”
Despite this, he emphasizes that his five-year-old start-up is not a charity. “We make money from the added value, the hard parts, which is the analytical side.”
It currently works with about 50 financial institutions, mainly in Europe and Australia, and focuses specifically on those who use open banking for credit assessments.
They can be loan brokers trying to automate the screening of loan applicants, consumer loan companies, or companies that have now purchased, for a different fee, that want higher speed and higher conversion rates.
These companies can build their own data science teams that do nothing but clear data, enrichment, classify transactions and analyze the top, says Masters, but it’s a pretty big investment. “The alternative is to get to Nordigan,” he says.
Go free or go home
Masters estimates that there are about 380 AISP providers operating in Europe – companies such as Plaid, Tink and Truelayer – each offering their own pricing models and different API documentation.
“We started testing the APIs and realized that you can build a super light infrastructure at a very low cost,” says Masters.
The next step was to decide whether to try to offer the cheapest solution on the market or to take the bold approach and offer it for free, funding analytical solutions above. “It took us a very long time to decide,” he says.
Now that they have done so, Masters expects others to follow in his footsteps. “I’m pretty sure many companies have thought about it and now they understand they need to do it to prevent us from being the only ones.”
Nordigan runs its services on Microsoft Cloud, with its analytics almost completely automated. Most customers sign up through a self-service portal and use pre-built libraries (although startups also have customers who request more custom systems, Masters says).
Masters says Nordigan is careful not to raise too much capital too quickly, to avoid a situation where he has to be too aggressive about how he spends it. “We only raised 1.4 million euros, which is because we are trying to generate actual revenue,” he says. The company now has 20 employees, all based in Riga.
However, at the moment, Nordigan has a huge list of registrations that it is processing. “If 2021 is a normal year, we are considering a round of fundraising just to accelerate the speed at which we are able to provide the free service and expand the number of countries in which we operate,” he says.
“There are regulations that really address them. Technologies are accelerating rapidly.”
Masters expects European regulators to continue to open access to banking data, and to be based on open banking and the second iteration of the Payment Services Directive (PSD2). “PSD3 will have more data, PSD4 even more – it’s like a train,” he says.
The fact that PSD2 came into force in parallel with the GDPR is also the key. “I think it’s the best thing that happens to consumers,” he says. “There are regulations that really address them. Technologies are accelerating rapidly, and regulation is also very, very stringent.”
In his latest move, Masters says Nordigan has gotten on many feet, “but then how can you move forward if everyone is nice all the time?”
“It feels like we started a new venture as part of an existing five-year-old startup,” he adds.
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Kit Gillette is Sift’s Eastern European reporter. He tweets from @KitGillet