Brite Payments CEO Lena Hackelöer talks Open Banking in 2023
As the CEO and Founder of the Brite Payment Group, Lena Hackelöer leads the fast-growing second-generation challenger in the European payment space. Brite enables consumers to make payments using their bank account and employs state-of-the-art open banking technology to process instant payments across Europe across a wide range of verticals.
Hackelöer has over a decade of experience in the fintech space and cut her teeth on the market at Klarna, where she spent almost seven years, rising through the ranks to become its director of marketing. We caught up with her to find out more.
Will there be any major advancements in open banking this year? If so, what?
Yes. There will be some advancements taking shape within the open banking space. We’re already starting to see PSD3 take shape in Europe, which is positive, though it will still be some time until it is implemented. PSD3 is a proposed revision to the framework that regulates electronic payments and the banking ecosystem within the European single market area (EEA). The revised directive could have real benefits for the space, especially if it includes a recent recommendation from the European Banking Authority around the need for open banking API standardisation.
The industry is also right on the cusp of account-to-account (A2A) recurring payments taking off, which is another huge open banking innovation. The subscription economy has become a permanent fixture of everyday life, but there’s still many aspects of the customer experience that are let down by financial services. A key example is unintentional failed payments, often caused by changing details or expired payment cards.
Recurring payments set up on an A2A framework can mitigate this issue. As a result, the growing number of businesses with subscription-based offerings can use them to reduce customer churn and unlock new opportunities. That’s why in the next year, I think we’ll see solutions of this really take off. The benefits are simply too great to ignore, and none of it would be possible without open banking.
Do you see any major trends within instant payments?
Clearly, there is a myriad of economic issues facing the global community right now that are pushing businesses and individuals to their limits. Between inflationary pressures, a cost-of-living crisis and continued supply chain disruptions, there’s never been a better time to find areas where cost savings can be made. Instant payments can deliver cost savings for merchants, and as such, they are becoming increasingly valuable.
The sector should be boosted by a recent European Commission legislative proposal, which seeks to enable citizens and businesses holding a bank account in an EU (or EEA) country to send and receive euro payments in real time, within only 10 seconds, 24/7/365. Considering the cost savings and additional fraud reduction offered through instant payments, it’s great to see this being pushed at the pan-European legislative level.
Do you think the continued economic downturn will affect the fintech sector? If so, what will be its impact?
The fintech and the broader tech sector has already felt a downturn this year, and many have already adapted to a new reality, so many are probably already prepared for the continued headwinds and a prolonged downturn in 2023. However, it’s clear that the years of unabated venture capital funding are over, and start-ups will now have to fight much harder to raise capital. For those further up the food chain, consolidation has been the name of the game, with businesses looking to secure and preserve market share.
A broader economic downturn could affect fintech in a few ways. On the one hand, a dip in consumer spending, and the resultant drop in payment volumes would lead to lower consumption of services offered by fintechs, such as lower payment volumes processed due to a lower level of shopping activity. However, there’s also reason to believe people would turn to fintech solutions that help them to do more with their money, or to get more favourable rates on essential financial services, such as loans.
Regardless of what happens, the last year has also highlighted that fintechs that are disciplined, and that stick to strong, sustainable, and sensible business fundamentals are still able to thrive. If you can remain realistic about customer acquisition costs, retain a tight control over spending and show an ability to generate significant revenues then there’s no reason to believe you won’t emerge from this potential downturn stronger than ever. Additionally, there are a great number of fintechs that offer solutions with tangible benefits to consumers and businesses – they are not just “nice to haves”. If these fintechs can demonstrate the value they bring, it will help them navigate the downturn.
Away from payments, what changes do you hope to see in the industry over the next 12 months?
The growth of A2A payments also intersects with another major trend: embedded finance. This is an area I’m also interested in. The continued digitisation of everyday services is creating new use cases, and demand for these products is maturing. Surely we can all agree that smoother processes for consumers using financial services are a desirable goal that embedded finance can contribute to significantly. Payments have been at the forefront of the embedded finance revolution, but we are expecting to see many more financial services emerge within this space in the next year.
