There is an ongoing story developing in Europe of debit card and challenger bank middleware giant Wirecard. They have been thrown into crisis after an audit uncovered over $2 Billion in bonds on their balance sheet that were unaccounted for, causing them to file for insolvency in Germany. There has been a massive ripple effect of this throughout the fintech ecosystem in Europe. The UK based Financial Conduct Authority (FCA) has frozen the accounts of all customers who are using apps dependent on Wirecard technology. This means that millions of customers won’t have access to money to pay their bills, medical expenses, or rent, for weeks. It has shown the danger of vertically integrating your tech stack so it is heavily reliant on a single vendor.
The Importance of Vendor Flexibility
Wirecard is not the first example of the perils of being reliant on a single bank or technology vendor. In October, there was a service outage at middleware fintech API provider Galileo, which shut off account access for thousands of Chime and Varo Money banking customers. Integrating into banking and payments middleware is complex. You may be thinking to yourself: “this should be easy to fix, can’t they just create a failover service similar to cloud services like AWS?” In the highly complex banking and payments world, integrating multiple vendors takes months of time and has a high cost.
This is why Hydrogen has created a standardized integration layer that allows our clients to move (or setup with multiple vendors and operate on a failover model) in between vendors at the click of a button. Many of the Wirecard customers will now spend months and millions of dollars integrating a new infrastructure. This will cause many of their clients to leave to another app. What the customers don’t realize is that the exact same risk will exist with the new app. The cycle will repeat itself, and customers are the ones that ultimately lose. There is an easy fix for this problem.
The Hydrogen Solution
Hydrogen has a standard data model. This allows us to abstract away middleware and back office systems, making an app indifferent to the provider. If Wirecard fails you can easily move to another vendor without doing any integration work. The only thing that may change are the business terms and legal contract signed with the provider. In some cases, the switch is so seamless, your end customers may not even know there is a new vendor in the background!
Our app provider customers can toggle fintech integrations on and off. We provide integrations API documentation, an integrations quickstart guide, an integrations UI to manage keys and parameters, hundreds of UI tools and components to offer integrations, and also provide wholesale price discounts for many vendors.
It’s not just for debit cards and challenger bank providers, you can create the same vendor flexibility across payments, KYC, brokerage, data, analytics, and any other category that we add in the future! Minimizing vendor risk has never been more important in fintech, and Hydrogen is here to help. Click the link below to start adding integration partners in under 5-minutes via the Hydrogen Lab onboarding.