“Open banking is the future.” At this point, who in the fintech world hasn’t heard that phrase? However, when (what was believed to be a burgeoning public banking company) and one of the innovators in the field, announces that it will be phased out, you can’t help but wonder if the problem lies in the product or in the company itself. This is the question we posed to the fintech industry as ING announcement Yolt, the open banking API, would be phased out.
Last year, Yolt’s parent company, ING, the Dutch multinational banking and financial services company, has shut down Yolt’s personal money management app. A year later, the parent company announced that all business-to-business open banking would be halted, with the aim of completing the phase-out process by the end of April 2023. In a statement, ING said:
“After a thorough evaluation of all options, in the context of a fast-paced and changing market, ING has concluded that it is not possible to achieve its ambitions with Yolt (formerly Yolt Technology Services). ING and its businesses continuously evaluate their businesses, including assessing whether they are likely to achieve the preferred scale in their market within a reasonable time frame.In this context, the assessment led to the decision to phase out Yolt.
“Yolt has informed its customers of the decision and the planned reduction in their services. Until the services are terminated, Yolt will continue to fulfill its contractual obligations to meet customer expectations.
Where was the problem?
We reached out to the industry to unveil the news and what it means for other Open Banking API players. Who or what was really to blame for the failure?
Ivan MaryasineCEO and co-founder of Moniteaccounts payable automation company, championed open banking technology, pointing out that the era of the superapp means there’s less room for error: “In the fintech space, we’ll be coming back to Yolt‘s folding like a classic, first generation. Parable of fintech: You have a promising business with a hot new technology, but it just hasn’t generated enough revenue. They couldn’t connect all the dots, and that’s because they weren’t connecting the dots for their customers.
“We need to do more — offer more — in the fintech space. APIs are such now that the age of the super niche app has arrived, and the standard for businesses that need 10 different fintech APIs and services is now outdated. The problem arises when fintech customers start putting all this magical technology into practice. They often find that onboarding and usage is more of a headache than they anticipated, offerings are diffuse and pervasive, and promises aren’t delivered.
“There is nothing ‘wrong’ with open banking, and I don’t think this shutdown is indicative of any negative trends. Rather, we should take it as a wake-up call. At present, the Most fintech vendors are leading with new tech messages, but customers are left alone to piece it all together We need to start delivering solutions to specific headaches, and we need to provide focused platforms and that serve customers wherever they are.‘already working. The era of the fintech superapp has arrived, and there will be many more Yolts if we as an industry don’t change our proposition.
The open banking sector has often been characterized as overvalued in the short term and undervalued in the long term. While ING’s decision may cause some banks to reconsider their short-term business plans related to open banking, I don’t think it will impact their long-term goals. Especially with the European open finance regulations fast approaching, which should solve the current problems of open banking processes.
Krzysztof Grzeszczuksenior innovation consultant at Netguruthe software development and consulting firm, reflected on why Yolt was so successful initially, but identified the crucial mistake that led to ING’s announcement: “Yolt was the an early player in this game, with an open banking-based solution for consumers. After a very promising start that garnered a lot of industry attention, the first early warning came following the decision to move from from a B2C service offer to a B2B service offer.
“While the Yolt app showed the potential of PSD2 services and combined them with an attractive user interface, the switch to Yolt processing services was an entry into an already crowded market. We don’t know what was the “preferred scale on their market” mentioned in ING’s announcement, but one can only guess that eliminating a service that was slow to break even was a relatively easy and quick way to improve ING’s future quarterly results. In addition, any bank offering services to other financial institutions is always in a more difficult position compared to third parties who do not have a portfolio of competing banking products, especially when the third parties are heavily funded by large organizations. Cards.
Rolands MastersCEO and co-founder of Nordic, the open banking API platform, also defended the technology saying, “The situation with Yolt is in no way indicative of the success of open banking. Open banking continues to grow globally and technology adoption rates are higher than ever, exceeding six million users in the UK in May 2022. Going forward, we will see open banking become an integral part of financial services, used across all markets and products. Nordigen is excited to be part of the journey to further democratize open banking.”