Nordigen Launches Free European Open Banking API

The Latvian financial technology company, Nordigen, is transitioning to a freemium business model by offering a complimentary open banking API. While open banking aims to make financial data more accessible, the company contends that APIs from providers like Tink and Plaid come with substantial costs. Nordigen proposes offering free access to an API for obtaining account information, while charging fees for advanced analytics and insight-based services.

Open banking is a comprehensive concept encompassing various functions, including account aggregation, verification of account ownership, and payment initiation. At its core, open banking enables the viewing of financial data from different institutions. As an example, certain banks allow users to link accounts from other banks, consolidating their financial overview into a single platform.

Connecting to a bank can be achieved through two primary methods. Some banks offer an application programming interface (API), allowing for direct data exchange between your system and the bank’s servers.

Although the European PSD2 directive mandates that all financial institutions provide an open API, many banks have been slow to implement this requirement. Consequently, open banking API companies often utilize screen scraping, a technique that simulates user interactions with a web browser. This method is generally slower, demands significant server capacity, and is prone to disruptions.

“The design of our free banking data API was specifically tailored to align with the principles of PSD2, resulting in a lightweight system in contrast to those of established players. This means scaling to accommodate free users won’t substantially impact our expenses,” explained Rolands Mesters, co-founder and CEO of Nordigen.

It’s important to note that Nordigen’s API doesn’t currently offer complete coverage. The startup presently supports 300 European banks, representing coverage of 60 to 90% of the population within each country. However, given that the product is offered at no cost, it’s difficult to raise objections.

Certain Nordigen users may require more detailed information. Nordigen also delivers financial data analytics, which can be especially valuable for lending companies assessing credit risk, or financial institutions with specific income criteria, among other applications.

These supplementary services are subject to payment. Nordigen currently serves 50 clients and anticipates attracting a larger customer base with its newly adopted freemium approach.