In the latest fintech interview I feature a company which doesn’t provide financial services to businesses or consumers, but enables other fintechs to do just that.
It is one of those companies that fits into the second syllable of the noun fintech and is a product of the open banking revolution.
Meet TrueLayer. Set up in London in 2016 by Francesco Simoneschi and Luca Martinetti, after years of working on separate start-up projects the friends got together on a project fintech project encouraged by the changes in the banking sector.
TrueLayer finds itself in the heart of the tech part of fintech as an application programming interface (API) supplier to fintechs.
It provides an API that enables software developers at fintechs to create services that use information from banks. It enables them to be “a secure conduit between the banks and third party applications,” according to Simoneschi.
It is a child of the open banking revolution in Europe. The EU’s Payment Services Directive (PSD2) and the Competition and Markets Authority’s (CMA’s) rules for open banking in the UK, means banks must be able to give third-party financial services suppliers access to customer data, if the customer agrees, through application programming interfaces (APIs).
TrueLayer began in 2016 when Simoneschi and Martinetti, both with engineering backgrounds, decided to get involved in the changing fintech sector.
It launched its first product, which was an API to access customer banking data. It took 6 months from having the idea to offering the API to developers for feedback and 12 months to have its first paying customer.
Today peer to peer lending platform Zopa is a flagship customer on a list of fintechs which includes ClearScore, Canopy, Plum, BitBond, Emma, Anorak, and CreditLadder (featured in an earlier interview).
Zopa uses TrueLayer for faster income verification, Canopy to automatically update its customers’ rental information, Plum to connect its chatbot with Monzo and Starling Bank accounts, and Anorak to provide more accurate and timely insurance quotes.
In the old world people have to send statements to prove their finances but through the API integrated by a financial service customers banking details are automatically shared if the customer permits. This makes things like customer onboarding easy and can provide customers with additional services based on their finances.
“Fintechs and other businesses can easily verify identity and account ownership using existing customer data; view accounts, check balances, and access transaction history; query bank accounts and cards to build powerful applications; and mitigate fraud and enhance credit scoring modelling using detailed income and expenses data from users’ bank account,” according to TrueLayer.
Customer fintechs are charged by number of bank accounts they connect to through TrueLayer. As a result it is scalable and customers can range from the smallest fintech all the way to the largest consumer platforms.
The London based company now has 40 staff. It is on an aggressive product roadmap with plans for news offerings
But having a business plan so interlinked with legislation creates the biggest challenge.
“As our product was tackling and capitalising on a big legislative change we had to track and respond to the evolving regulatory environment,” said Simoneschi. “The landscape could quickly change as the regulation advanced and our product had to develop accordingly.”
To this end the team had to design the product around different scenarios and hire experts with the agility to execute these scenarios.
The challenges continue. “As Open Banking is still a relatively new concept there is plenty of work to do to make it mainstream and widely accepted by consumers,” said Simoneschi. “We’ve seen that consumers who encounter Open Banking-based services are generally very willing to let their financial data be used. However, we know that this trust is fragile.”
“This is why we’re developing our services to include mechanisms that increase trust and transparency. Through this we can educate consumers on their rights, make it clear how Open Banking works, the benefits and the businesses they can trust.”
Potential changes to regulation is not its only government instigated challenge. Simoneschi said Brexit is a major cause of uncertainty for the company. “Added to [regulatory] complexity is the uncertainty around Brexit and the impact it is going to have on the financial services industry.”
But like most startups and early stage companies, to coin a sporting cliché, TrueLayer ‘can only play what is in front of it’. To this end it wants to have the best team in place for the challenges that crop up.
To this end it is always looking for tech professionals that understand simple design and iterative development, to join its ranks.
Beyond its tech skills it wants “people who have a great attitude, ambition and a hunger to learn”, which according to Simoneschi are “always at the front of the hiring queue.”
He added that the company needs problem solvers. “They see a challenge as a way to create an innovative solution and test their abilities, not as a headache or a roadblock. We work in such a cutting-edge field that experts simply don’t exist yet, so it’s crucial they can learn at lightspeed.”
Read the previous fintech interviews