B2B Payments

German Bank Eases Startups’ Regulatory Challenge

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FinTech players have been discussing the likely rise of traditional banks partnering with innovators to integrate more sophisticated solutions for their clients, a more cost-effective way of modernizing infrastructure instead of developing new solutions in-house.

But Germany-based Sutor Bank is flipping this tactic on its head. The financial institution announced Tuesday (March 22) that it is rolling out multiple APIs aimed at FinTech innovators and startups so they can have access to banking solutions, like payments, lending and investing.

“Founded in 1921, the Germany B2C and B2B banking outfit is re-engineering its business for the digital age,” reports in Finextra said in announcing the launches, adding that it is collaborating with Software-as-a-Service firm Pass.

Together, the companies will develop interfaces that allow mobile and digital startups to integrate directly into Sutor Bank’s banking platform.

“With the new APIs, Sutor Bank is becoming a one-stop shop for all digital businesses,” stated the bank’s owner and managing director, Robert Freitag. “In the future, firms will receive all banking services from Sutor Bank as their single source, allowing them to provide these services to their own customers.”

The executive added that Sutor will develop white-label solutions, as well as collaborate with these startups to create more personalized tools.

“Our experience shows that APIs are not sufficient for co-operations since they solely represent the technical side of things,” Freitag said. “In most cases, we have to design a process to meet our clients’ requirements, as well as the regulatory ones — even if it’s only a simple payment process at first glance.”

Freitag emphasized the compliance component that banks can provide to startups.

“Sustainable business models have to comply with regulatory rules — today and in the future,” he said. “Our experience shows that many business models fail not because of technical issues but because of regulatory ones.”

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The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.

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