Tomáš Fíla 's interview|Finbricks

Open Banking has unlocked opportunities that no bank can ignore. At Societe Generale we have approached it as a catalyst to innovation rather than as a threat. 

Under the European Union’s second Payment Services Directive (PSD2) banks must give third-party service providers access to consenting customers’ personal and financial data. Through application programming interfaces (APIs) those third parties can use the shared data to provide payments and other services to their customers.  

Our starting point in terms of innovation has always been to leverage the strengths and talent that we have in abundance within the bank. It’s why we have such an impressive track record in developing products and services which offer new and better services to our clients, make us perform better operationally and make us more sustainable.

A fine example of this at work in Open Banking is FinBricks, an internal start-up of Komerční banka (KB) Societe Generale’s Czech banking group. I caught up recently with Tomáš Fíla, who established FinBricks with fellow KB colleague Pavla Knolová, to find out how PSD2 was the catalyst to their business in enabling payments and other services. Joining us was Jiri Cerny of KB Smart Solutions, the innovation team at KB. 

Tomáš, tell me what FinBricks does?

FinBricks offers third party service providers a multibank aggregation platform which through APIs gives them access to payments data or account information. We’re providing back-end infrastructure for which our clients pay fees, depending on how they use it – a fixed one for the platform and/or transaction fees for their usage in uploading data. We started in the Czech Republic and currently have five major clients in production, while working with another 20 on implementing our services.

We know how payments work in the Single Euro Payments Area (SEPA) and we are testing our approach now in Romania and Hungary to offer the same quality service as in Czech Republic. Everybody's trying to cover the Western European market and since we are in the middle of Europe, we decided to go east and focus on the CEE market and neighbouring countries. In every market we always want to find a strong business partner with whom we can launch interesting payment services.

What is the benefit to the client of using FinBricks?

Our value is in reaching accounts at multiple banks and feeding the data or information back through a single connection. The original intention of PSD2 was that authorised entities should be able to access these themselves, but it became clear that the situation was much more complicated. Each bank has different approaches and different formats so it's much more efficient to leave the integration to specialist companies like FinBricks and for the third party providers to purchase a standardised service from them.

How did the start-up come about?

I've worked at KB for 20 years in the field of payments. I started in operations and ended up running a department responsible for development projects. I led a PSD2 implementation project to ensure our systems complied with the legal requirements, especially the implementation of APIs for communicating with third parties. When we wanted to test our APIs we found there were no licensed entities on the market and we didn't want to test it with other banks. At the time, there was a huge concern that fintechs would crash the banks, that banks would be reduced to an operational function while fintechs would take over client relationships. So we decided to test the product using new APIs and be ready for a new business. We created a payment gateway called Zaplaceno.cz and in February 2019 we realised the first PSD2 payment transaction in the Czech Republic, which was quite fun - a beer purchase in an e-shop. I’ve still got the screen shot of the transaction.

At the beginning of 2020, we had a very interesting opportunity to cooperate with a personal finance management solution called BudgetBakers, which wanted to enable its users to make payments. It was the first time we provided a solution as a back end service for a third party business serving end users. Shortly afterwards GoPay, the biggest payment gateway in Czech Republic’s e-commerce market, approached us to build a service together, where we provided the backend and they did the front end. It was an opportunity to penetrate the market of PSD2 payments with the market leader. Currently, PSD2 payments are already included in this payment gateway as a standard payment product in specific situations.

This is what led us to decide to focus on providing backend services for these types of clients. A year ago we rebranded as FinBricks, a name chosen because we are providing the APIs that are like the building bricks to clients’ business: payment initiation, account information, bank ID, digital ID and so on. They can build a service on top of our backend infrastructure.

How has KB helped you?

As an internal start-up we received the funding and support on building the product and now in expanding the team. We are still working under the KB licence in the Czech Republic but are looking at applying for our own licence. Before we can do that we need to be set up correctly with a compliance officer and the other functions. We have strong support from the compliance team and the legal team at KB and we’re trying to find some synergies for sales in terms of prospective clients.

We are counselled by KB Smart Solutions, the subsidiary company established by Komerční banka to invest in fintechs and to accelerate internal start-ups, which is helping us to scale the business and explore foreign markets.

What do you do differently to make FinBricks a success?

Our key advantage is that as co-founders Pavla and I are specialists in payments and payments technology. There are some foreign technology companies saying that they offer payment services in the Czech Republic but often the reality is that what they provide isn’t working. This is because they have no business implementation and have no knowledge of the local market of payments processing. We aren’t interested in saying we have thousands of connected banks across Europe without knowing if it works in practice. Instead, we are tackling each country bank by bank in a production environment to offer our customers a functional connection.

How do you see Open Banking evolving?

In the first phases of implementing open banking, the solutions were limited to the consolidation of information from other banks in internet banking or various personal finance management solutions. I see the future mainly in payments, but we are still waiting for all solutions to stabilise, the way of implementing regulatory requirements to be clarified and users to stop worrying about the new payment method. Then I think that payments from bank accounts directly without intermediaries will find their place in a number of solutions, where they will replace mainly card payments and add payment functions where they are not present today. However, we must remember that this is a completely new technology and its adoption on both the provider and user side will take some time.

Jiri, how is FinBricks helping KB’s business?

The beauty of having an independent company is that it brings benefits at various levels. From the product development perspective, we should highlight that Finbricks goes beyond standard banking services – not only in coverage of the whole Czech banking environment and the CEE territory. As a start-up Finbricks can quickly implement requirements of their clients, resulting in faster and less expensive delivery of new business services.

If we look at the synergies from the business development point of view, Finbricks focuses on the direct monetisation of its solutions and with the specialised tech sales force, positively affects finding the accurate product-market fit. Altogether, Finbricks’ activities significantly influence the development of the PSD2 services market and support its adoption by end users.