Lars Markull is all about FinTech. Currently working in business development for German banking API figo, he’s both a catalyst and an observer of the financial sector’s digitization.
We caught up with Markull to discuss the FinTech community, a digital future, and the figo API.
What is your background, and what drew you to working in FinTech?
Actually I always wanted to work in a bank and never really considered working in a startup. However, while finishing my undergraduate degree in finance in 2012 I had my first contact points with FinTech through an internship in a venture capital company including an FinTech investment (SumUp). It made me realize that the industry is at the edge of disruption and mobile POS is just the beginning. I wanted to be part of this change, and joining a startup instead of a bank was a pure rational decision: It was obvious that new players like FinTech startups – not incumbents – will bring disruption and cause an ongoing change to the industry.
2014 saw incredible growth for FinTech. Why do you think it took so long for the ‘revolution’ to begin?
Personally, I don’t think it is a surprise that we haven’t seen disruption earlier in this industry. Regulation, power and credibility of banks and many other reasons caused entry barriers for new players – and not just for startups but for everyone. Consequently, it was logical for industry outsiders to disrupt “easier industries” first. But I think we can all agree, that time has come now for the financial service industry.
Figo provides access for startups to integrate with banks, creating many opportunities. What are some of the most interesting services you’ve seen driven by APIs such as these?
With figo’s banking API, our partners can integrate banks and many other financial sources into their own services. This service is definitely of high interest for FinTech startups, but banks can also benefit from such multi-banking functions.
As of today, we have in total more than 180 developers who are accessing our API in different ways, nevertheless, the main benefit is the same for all: speed! The industry is growing at a rapid pace and a banking API enables our partners to focus on their core product instead of “backend functions.”
We have many interesting solutions on our figo API, but Auxmoney is a very well-known player and an interesting case as well. The P2P crowd-lending platform Auxmoney is, with our figo API, finally able to score loan applicants in real time. The loan applicant can connect his bank account through figo to Auxmoney, and Auxmoney is able to score the customer faster and more accurate than before. Additionally, there are many more banking API use cases for Auxmoney.
A second interesting banking API example is from the US, called Digit. The service is a small add-on for a bank account and would have probably never been developed without the help of a banking API. The user connects his bank account to Digit and the service automatically analyses the income and expenses on this bank account. Based on these transactions, digit automatically calculates an appropriate savings amount for the user and transfers this amount to a separate savings account. This is a small but great example of how a banking API can foster new services in the FinTech space.
Chris Skinner recently commented on the real opportunity being FinTech banks, rather than integration with traditional banks. How does that impact figo’s mission in the future, if you agree with the statement?
I totally agree with Philippe Gelis’ outlook for the FinTech industry. He describes a future where traditional banks will be replaced by FinTech banks. The key advantage of these FinTech banks are their smart APIs, which will allow any third party service to easily access financial data of the customers.
Even though I agree with the statement, it is a big question when the majority of banking customers will switch from traditional banks to these FinTech banks. This will surely not happen in the next five years.
In respect to figo, I do not think that such a development will make a banking API redundant. It might be easier for third parties to connect to these FinTech banks, but the financial industry in total will still be fragmented and financial data will be spread around many sources. A banking API will still add value for companies in this fast-paced environment.
Are the biggest challenges you face to do with market education, technical issues, or regulatory?
These three are surely the most important challenges for us. It is hard to say which one is the biggest challenge and they also differ from country to country. In general you can link regulatory and technical issues together. Currently, the European Union is discussing PSD2 which implies the “access to bank accounts.” It is expected that the EU will rule that banks cannot forbid their customers to use financial data in third party services. Consequently, our regulatory challenges will hopefully decrease. This will reduce technical challenges as well since banks would not be allowed to block third party services anymore but rather open up to them (but we might need to pay banks for accessing the data).
This leaves market education as the last variable. This is, and will definitely be, an ongoing challenge for us in the next couple of years, but fortunately, we are not the only one educating the customer about new possibilities in the financial service industry. Every FinTech startup and innovative bank is, as well.
How are you leveraging the FinTech community to drive interest in your API?
The growing FinTech developer community is indeed a very important resource for us. In order to increase interaction between figo and our developers we are planning different events – most importantly a FinTech hackathon (Bankathon) in Frankfurt next week. We are hosting this two-and-a-half-day hackathon with our friends from Gini and can happily announce that the event is fully booked up. The event will be very different from a typical hackathon, since many of the participants have already a strong FinTech experience: there will be many active figo API developers and also several existing FinTech startups (Number26, Vaamo, FinLeap and many more) answered our call and want to “code the future of FinTech” with us. The participants will not only benefit from the creative and intensive experience but also from some very helpful connections. We will have representatives from our sponsors (e.g. Deutsche Bank, HypoVereinsbank and biw Bank) at the event who will be able to provide helpful banking insights and the impressive jury (Orange Growth Capital, Accel Partners, SBT Venture Capital and Anthemis Group) will at the very end decide who wins the first prize of the Bankathon 2015.
Do you have any final comments about figo and the future of financial services?
Financial data is both the most intimate and most powerful data we have about ourselves. So far this data was always kept in silos – in our online banking service. At figo, we are seeing more and more newly developed services which are about to change that and will use financial data in a completely new way.
I personally expect that sharing personal financial data with third party services will become common and many people will happily agree to share them. This may sound frightening at the beginning. Nevertheless, people will agree to share their financial data with a certain service because they will get something in return. This could be a discount on a financial product, a better (tailored) offering to the needs or access to a certain financial tool.
Right now we are used to the fact that our financial data can only be used in online banking solutions, however, in the future regulation and new services will put us in driver’s seat. Eventually, every one of us will be able to decide where he would like to use his financial data and who should have the right to access and work with it.