Latest / Fintech Conversations with Fexingo: Banking, Payments, and Financial Software Companies / How Fintechs Use Open Banking for Subscription Management
Transcript
- Lucas: Luna, I was looking at my credit card statement last night and realized I'm paying for three streaming services I haven't opened in months. That's about 45 bucks a month just disappearing. Luna: You are not alone. The average consumer underestimates their monthly subscription spend by something like two to three times. Fintechs have noticed, and they're building a whole category around it. Lucas: Right. So today — how fintechs are using open banking to manage subscriptions. And look, a quick honest thing: a handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making this many of these episodes. No ads, just listener support. If these conversations are useful for what you're building or running, that's the reason they keep coming. Luna: Yeah. It's a small group but it makes a big difference. So back to subscriptions — the key enabler here is open banking. The ability to see a consumer's transaction history in real time, with consent. Lucas: Exactly. In Europe, PSD2 made that possible. In the US, it's been more fragmented, but the Consumer Financial Protection Bureau's new rule on open banking, finalized last year, is pushing things in the same direction. So startups can now connect to a user's bank account, pull all their transactions, and identify recurring charges. Luna: And that's where subscription management becomes more than just a budgeting tool. It becomes an intervention. Companies like Rocket Money — formerly Truebill — analyze the data and say, 'Hey, you're paying $15 a month for a gym membership you haven't used since 2023. Want us to cancel it?' Lucas: And they'll do it on your behalf. That's the sticky part. Rocket Money will actually send a cancellation request to the merchant, or even negotiate a lower rate on your cable bill. They claim to save users an average of $700 a year. That's not chump change. Luna: But the model is interesting. Most of these apps are freemium. You get basic tracking for free, and then they take a percentage of the savings when they cancel something — typically 30 to 60 percent. So it's performance-based. Lucas: Which aligns incentives. They only make money if they actually save you money. And because they have access to your transaction history through open banking, they can detect subscriptions even if you forgot about them. Things like an old cloud storage account, a magazine subscription you signed up for at the airport. Luna: There's a newer entrant in the UK called Snoop — it's actually part of the Allica Bank group. They go a step further. They not only find subscriptions, they also flag when a utility bill goes up and suggest switching providers. All powered by open banking data. Lucas: And that's the broader play. Subscription management becomes an entry point for a full financial health platform. Once you have permission to see someone's transactions, you can offer budgeting, savings recommendations, even credit products. The subscription feature is just the hook. Luna: But there's a privacy tension here. Consumers are giving these apps read-only access to their bank accounts. The data is incredibly sensitive. If the fintech has a breach, or if they use the data in ways the user didn't expect, trust evaporates. Lucas: And that's why the best in the space are very transparent about data usage. Rocket Money, for example, uses Plaid or Yodlee for the connection — those are established aggregators. But the user still has to authorize each connection, and they can revoke it anytime. Still, you're right, the trust factor is huge. Luna: There's also a behavioral economics angle. Why do people sign up for subscriptions and forget about them? It's the 'set it and forget it' mentality. But also, many subscriptions are deliberately hard to cancel. The New York Times found that some gyms require a certified letter to cancel. Lucas: So fintechs are essentially acting as consumer advocates in a system designed to make cancellation painful. They automate the friction. In some cases, they even generate the letter or fax it for you. That's real value. Luna: And it's not just consumers. Small businesses have the same problem. They have subscriptions for software, domain registrations, office supplies. A startup called Billshark — which is more of a concierge service — handles both consumer and small business bill negotiation. Lucas: Right. So the market is sizable. One estimate from Juniper Research says subscription management apps could save consumers globally over $15 billion by 2027. And open banking is the infrastructure that makes it possible. Luna: I want to talk about the neobank angle. Some digital banks are embedding subscription management directly into their apps. Monzo in the UK has a feature called 'Subscription Tracker' that uses open banking to show all recurring payments in one view. Lucas: And that's smart because it increases engagement with the bank's app. If you check your subscriptions weekly, you're also seeing your balance, your savings pots, maybe a loan offer. It's a retention tool. Chime has something similar in the US, though it's more basic. Luna: So the question becomes: will standalone subscription management apps survive, or will they get absorbed into banking apps? I think there's room for both. The standalone apps can be more aggressive — they'll cancel things without needing to maintain a banking relationship. Lucas: But the banks have the data advantage. They already see the transactions without needing an external connection. And they have the trust — or at least, they've had it longer. So maybe the standalone apps are acquisition targets for banks. Rocket Money was actually acquired by a group of investors, not a bank, but that could change. Luna: There's also an AI layer emerging. Some startups are using machine learning to predict which subscriptions a user is likely to cancel based on usage patterns. For example, if you haven't watched a streaming service in 60 days, the app proactively suggests canceling. Lucas: That's predictive churn prevention, but from the consumer side. It flips the script. Normally companies use AI to stop you from canceling. Here, the AI helps you cancel. It's a nice reversal. Luna: One thing I find fascinating is the geographic difference. In Europe, open banking is standardized through PSD2, so any licensed provider can access data. In the US, it's still a patchwork. The CFPB rule will help, but it's not fully implemented yet. So European fintechs have a head start. Lucas: And that's led to more innovation there. For instance, a UK startup called Yaplee — though it's more focused on switching energy and broadband — but it uses the same open banking rails to initiate switches automatically. Subscription management is just one use case. Luna: I think we'll see a convergence. The same open banking APIs that let you cancel a gym membership will also let you switch banks, apply for a mortgage, or consolidate debt. Subscription management is the gateway drug. Lucas: And the numbers back it up. A recent survey found that 62 percent of consumers would be more likely to share their banking data if it helped them save money on subscriptions. So the demand is there. Luna: That's a powerful stat. It suggests that privacy concerns can be overcome with tangible value. If I save $200 a year, I'm probably okay with a fintech seeing my transaction history. Lucas: Right. As long as they're transparent. And that's the challenge — maintaining that trust as these companies expand into more data-intensive services. One misstep and the whole category could suffer. Luna: Agreed. So where do you see this going in the next year or two? Beyond just cancellations. Lucas: I think we'll see proactive recommendations. Not just 'cancel this,' but 'here's a cheaper alternative.' The fintech could negotiate a bundle deal on your behalf, or switch you to an annual plan that saves 20 percent. All automated through open banking. Luna: That's essentially a robo-advisor for your recurring bills. It's a compelling vision. And it's already happening in small ways — some apps let you set a max price for a service and automatically switch if it goes over. Lucas: Exactly. So subscription management is more than a niche. It's a lens into how open banking changes the power dynamic between consumers and companies. When your data is portable, you can vote with your feet — or with a click. Luna: And that's a real shift. Okay, I'm going to check my own subscriptions after this. Lucas: Same. I bet I find at least two I'd forgotten. That's the thing — the real value might just be awareness. Seeing it all in one place. Luna: Yeah. And if a fintech can give you that awareness plus an easy way to act, that's a product worth using.