Founded in 2009, Kontomatik’s banking API is now available in Poland, the Czech Republic, Slovakia, Spain, the UK and Portugal as well as in the Latin American countries of Brazil and Mexico.
Marcin Truszel, the founder and CEO of Kontomatik*, spoke to Justyna Wróbel about the start up’s recent expansion, its acquisition by a German leader in financial technologies and its future development plans.
Earlier this year, in February, you announced your collaboration with ten British banks. How did you convince them to work with you?
Well, I must say you are partially right; there is always a little “but”. This February Kontomatik did develop API connections to ten British banks, however, we are actually fetching the data from the banks without their permission. It is not like we are doing anything illegal, mind you. We are just letting the clients of these banks use their data in other applications. Hence, we didn’t really have to convince the banks to start working with us.
I see. So this is what you have done in the UK; what other countries are you looking at, now?
At the moment, the Kontomatik Banking API is available in nine countries: Poland, Czech Republic, Slovakia, Spain, Mexico, Brazil, Russia, the UK and, most recently, Portugal. Our plans are not yet clear for the rest of this year. We are looking at a few different regions with expansion in mind. In particular, Asia seems quite interesting, yet we still have to see how developed the online banking systems are in each particular country of the region, so we can make a calculated decision.
Now a quick look at Poland: Alior, Idea Bank. What are you already doing and planning to do together?
Actually we already collaborated with both Alior and Idea Bank a few years ago. Kontomatik API allowed Alior Sync to get clients, from other banks, on-board quickly and comfortably. Our technology helped their users to transfer their custom settings, such as predefined payments and to speed up the whole process of on-boarding.
Idea Bank used Kontomatik to get the best-in-class data for its credit assessments. Unfortunately, we are no longer collaborating with either of those banks because of the restrictions of the Polish Financial Supervision Authority (KNF). The good news is that this will change soon because of the revised Directive on Payment Services (PSD2). I am sure we will be collaborating with most Polish banks in about two years from now or maybe less.
Let’s go back to the very beginning, how did you come up with the idea of the service? Was it to control your personal expenses?
We started at 2009, by developing an App that helps with managing finances better. The idea was rather simple; such Apps were quite popular in other countries but there wasn’t a single useful application for Poland. So I thought: if there is nobody willing to make an App like that, why don’t I take this opportunity?
So you’re talking about Kontomierz, right? Once you had set up the company, how long did it take you to realise that you were going in the right direction?
That’s a good question. It actually took me two years to realise that I was not going in the right direction. Even though we had made a great application that was very practical for users and, within a very short period of time we spent dozens of thousands of złotys…it was still very hard to monetise the application and to make it grow.
Then I realised that we had some outstanding technology; technology that could not only be used by us, but literally any financial or banking institution in Poland. This is how I saw a new horizon in B2B.
So you came up with Kontomatik. How did that happen?
Once we’d developed the API connections for most of the Polish banks, a few banks approached us and asked us to help them out.
We, of course, we happily took that opportunity. We were still called Kontomierz at that time. Yet it is pretty hard to go global with a Polish name, so we rebranded it to something that was easier to remember in other countries.
Why is it so special, maybe even popular?
Honestly, I don’t think that Kontomatik is popular. It is a very innovative technology and its best times are still to come. Today, most websites have an option to login with Facebook or any other social network. Once you start seeing a lot of financial websites accepting login to the bank account, you will know that banking APIs are becoming popular too.
Having said this, I think Kontomatik is actually quite special. It was designed using state-of-the-art technology and it is faster than most of the alternatives. It is also very easy to integrate. These are two main items that contribute to our success nowadays and that will make us grow even further.
How have EU funds helped you develop the App and the service?
Our initial application for managing personal finances was actually built with EU funds. Even though we were just a small team and labour expenses weren’t the main concern, it is still rather hard to make a successful launch without a decent marketing budget. With EU funds we not only managed to design great software, but also had some capabilities to promote it effectively.
Was there a ground-breaking event that helped you reach a wider audience?
In January 2015, we were acquired by Kreditech, a European leader in financial technologies. This has provided us with an even better potential for growth. With the financial aid and expertise that Kreditech supplied we successfully entered new markets such as Brazil and Mexico. It has also helped us develop better marketing and sales activities.
With banking and related services there is always this danger of having your money or personal details stolen. How did you overcome that and how did you communicate that your service was safe?
There is always some risk and danger involved when it comes to money. Whenever there is some return there will be some risk. If you keep your money in a bank, it may go bankrupt and you may not be compensated in full. If you keep your money under the mattress, your house may get robbed or burn down.
When someone uses a banking API to share his data with a third party application, he gets many benefits, such as access to the products which weren’t available before and a saving in time as the process is online, not offline.
The main reason why our service is not fully safe is simple. If banks were a bit more open to collaboration, we could definitely design a better security layer. Notwithstanding that we are making a huge effort to secure our answers, and to completely remove the user’s data, once it is no longer useful.
Who are your clients or users? What is their profile?
Currently, we have three main customer segments. The biggest one is online lending companies. These guys have worked with online processes for a long time already and they are always looking for innovative tools to get ahead of the competition.
A second segment is composed up of banks — they are now looking more into banking APIs because of the PSD2. However, the decision-making processes are still quite slow for this segment.
Last but not least, we have fintech start-ups. There are quite a few companies that are developing all kinds of financial technologies and many of them need APIs to save on their development time. Not all of them have the funds to compensate us accordingly, yet we always try to come up with customer-friendly solutions.
What is your competition like and how do you show your users that you are better than them?
Banking APIs are pretty much an innovative thing. I am sure the competition will be much more severe in a few years from now, but today it is relatively low. There are a few companies doing the same thing as we do, some of them started earlier, others got into business just a few years ago.
The main idea about banking APIs is that a company has to code an API for each of the banks, in each of the countries separately and that takes lots of time. For this reason, even though there are competitors, there are still so many markets without any APIs….
We also try to be quite different from other API vendors. First of all, we put a very strong emphasis on technology and I don’t think there is anyone who can deliver a banking API with a better quality than we do. This results in a higher speed, better accuracy and an easier integration. We are not the cheapest because quality comes at a price. Yet we are still considerably cheaper than a few competitors. Finally, we are very customer-oriented and the way we treat clients is certainly something that makes us stand out from the rest.
How big is the team now?
Oh, it is constantly growing so I am not sure if my number is right. We have a technical team of around 40 people and the business team is composed of some ten talented people.
Are you planning to operate from Warsaw or to move the company abroad?
Warsaw is where we are going to stay, for a few reasons. First of all, it is a city that holds a lot of talent. Additionally the infrastructure is very developed. Added to this, the start-up ecosystem is constantly evolving and all of these factors make Warsaw a great place for our HQ.
What advice would you give to companies from the region who would like to expand to other markets?
It certainly depends on your core product. If a company has to design a product for each country separately, as we do, I would say that it is vital to make a careful analysis before expanding. If it is possible to sell the product without too many tweaks, go for the countries where your product will not necessarily be the first one to adopt, but is likely to be the last.
Today, how do you see the company developing over the next few years and where will the company be in ten years’ time?
This is hard to say. If I had had to answer this question, honestly, five years ago, I am sure my answer wouldn’t correspond to where the company is today. Financial technologies are pretty unpredictable as it is and companies such as Kontomatik are very influenced by the regulatory factors.
I can definitely tell you that our geographical coverage will increase significantly over the course of next five years. I am also sure that we will be developing other new products that make banking and financial institutions stronger, more customer-centric and more oriented towards outstanding online services. Plus, quite a few things depend on our parent company, Kreditech, as we are a part of the same group; we do have to make sure that our visions are mutually beneficial.
* In 2015, the comany’s name changed. Previously, it was called KontoX.
Click here to read more about the company and Kontomatik Banking API.