Codat partners with Basiq to unblock Open Banking for Australian businesses

Codat partners with Basiq to unblock Open Banking for Australian businesses

Codat, the universal API for small business data, and Open Banking platform Basiq have today announced a partnership to enable better business underwriting; an essential initiative given the Australian lending market is tightening its belt amid RBA rate hikes.

The integration, which is now live, will make transactions from more than 20 Australian banks available to financial service providers and fintechs, alongside the 30+, accounting, eCommerce and payments data sources accessible via Codat’s API.

For providers, it will unlock all the data needed for underwriting in a single integration without asking clients to share sensitive financial data via email. Codat’s Assess product then enables lenders to automatically cross reference bank transactions with accounting data to validate accuracy. For SMBs it means slashing the admin burden associated with applying for financial services like business loans, allowing them to provide all the necessary information in just a few clicks.

Codat chose to partner with Basiq due to the unique capabilities of the ‘Basiq 3.0 Platform’ which extends beyond the Consumer Data Right’s (CDR) Open Banking system.. Basiq’s platform allows access to financial data across a number of institutions, including those available through Open Banking and others not yet part of the system. Combining this data with Codat’s Assess product, Codat’s Australian customers, which include the likes of Judo Bank, will be able to underwrite with more confidence – particularly in uncertain economic times.

The CDR initiative has come under recent scrutiny from the fintech community, some of whom have invested more than a million dollars into Open Banking Accredited Data Recipient (ADR) connectivity and say despite its enormous potential, is not yet fit for purpose.

Underwhelmed startups have labelled the initiative “disappointing” and “useless” for business data sharing, given that consent is needed from all responsible business holders means no account data is flowing.

Damir Ćuća, CEO at Basiq said, “This partnership will enable access to financial data via the Basiq 3.0 platform. In an Open Finance world, financial data about a business can sit in a number of systems. While the CDR has the potential to transform financial services for business, it is not yet at a stage where we are able to rely solely on Open Banking data.

Our platform provides the flexibility to access financial data through both web capture and when it matures, CDR Open Banking. The key to better underwriting is to enable the most complete view of a customer’s financial situation, and that’s what we are able to provide together,” Ćuća said.

Matthew Tyrell (pictured), Commercial Director APAC at Codat, said the partnership is the first investment the company has made in Australia following a $137 million Series C raise – part of which will be allocated to driving growth Down Under.

“Since launching in Australia late last year, the demand for a product like Codat’s business data API has been steadily growing, which I see as an indicator of the health of the Australian fintech ecosystem, despite recent blows to the industry. The number of startups and SMEs looking for a plug-and-play data solution is on the rise, while more established players are sprinting towards financial transformation initiatives.

“Across the board, businesses are recognising the benefits of digital data aggregation over legacy (and risky) emailed bank statements and spreadsheets, meaning more fintechs are knocking on our door, and the region has become a strategic market for the company.

“Consequently, we’ve made the decision to invest in more functionality and more boots on the ground, specifically in Australia, to meet the demands of Aussie businesses who want to leverage the benefits of Open Finance but are realising the infrastructure hasn’t quite reached maturity. Our partnership with Basiq is one way Codat is bringing utility to financial data in a way that is otherwise not yet available in Australia,” he said.

Codat and Basiq have both announced strategic investments from San Francisco-based fintech solutions provider Plaid, which has over 12,000 connections to banks globally and has previously signalled its intent to help bridge financial data gaps between North America and Australia.

This latest deal has the potential to support this shared mission to help fintechs more easily interconnect to data sources in their respective countries and also drive more competition between financial services providers.