If you’re confused by that alphabet soup in the title, don’t worry, you’re normal. If, however, you work in the FinTech or European Union (EU) legislative space, you’ll know that this registration is a sort of licence that allows us to access balance and transaction data from banks in the EU.

Quick recap:

PSD2 – Payment Services Directive, is an EU directive, further implemented in national legislations of EU member states. It, among other things, mandates all EU banks to provide automated access (APIs) to account and transaction data to third party providers (like Toshl) and regulates how that can be done.

AISP – Account Information Service Provider. Toshl Finance in this case. We help our customers access their bank account data and provide services built on top of that, like helping to analyse how you could spend less and save more money, budget better etc.

As per the PSD2 directive, third party providers like us need to register with a national banking regulator in the European Union, to access the data and provide information services. As Toshl d.o.o., our European subsidiary and where much of Toshl development is done, is registered in Slovenia, we registered with the Slovenian banking regulator – Bank of Slovenia.

The registration requirements and process

It wasn’t an easy process. All together it took us almost a year to complete. We’ve had to provide hundreds of pages of documentation, ranging from our security practices, information infrastructure, risk management, various proof of ethical unencumberedness of key personnel, professional liability insurance, business plans, contracts with business partners related to account information and so forth. Last, but not least, it involved a lot more paper and physical mailing that an all digital company would prefer to deal with.

Yet on a hot summer day, we finally got the news:

As you can tell, there was much rejoicing among the Medici branch of the Toshl monster family.

The registration of TOSHL, razvoj aplikacij d.o.o., can also be accessed on the Bank of Slovenia website: AISP registrations English version, AISP registrations Slovenian version.

Passporting

At the moment, with the help of Bank of Slovenia, we are also sending our registration to all other EU member state banking regulators for confirmation and entry into their national registries. This process is known as passporting.

Benefits

Based on this new registration, we’ll be gradually updating our bank connections to connect in a more direct manner, using our own QWAC and QSEAL eIDAS certificates and with fewer required legal agreements with our partners to confirm, when adding new connections. It will also enable us to work better with banks to provide great new services to customers in the EU. So far, we’ve been using the shared or “umbrella” registrations provided by our bank connection partners Salt Edge and Plaid which help us in providing a more unified bank connectivity.

While we’re glad to have finally obtained this registration, one would be foolish to think all is sunshine and roses in PSD2 land. Even a year after the final deadline for PSD2 connectivity, many banks’ implementations remain abysmal or non-existent, EBA‘s (European Bank Authority) interpretations of the directive perplexing, to say the least… We’ll soon share more on the current PSD2 landscape and challenges ahead in an upcoming blog post.

In the meantime, see which bank connections are already on offer in Toshl and how you can switch to the new type of fully automatic connection (API), if you’ve been using an earlier type so far.

Update 21. July 2023: Upon our request, the AISP registration with Bank of Slovenia was withdrawn. Henceforth, we will be utilising the bank connections via our connection partners, licensed as AISP by their respective EU banking regulators.

You’ll now find a lot more bank connections available in Toshl Finance. 1418 new ones were added to be precise, bringing the grand total at the time of writing to 14 073 bank connections available worldwide. As new connections are added replaced all the time, you might want to click on the link to get the current number if you’re reading later on.

Rather than the raw numbers, what matters more with this update is the way that these new bank connections work. All of the new additions work by using the bank’s official automatic connection (API).

Why does it matter if the connection is API-based?

• It means the connection will always update fully automatically. No need to click “Update” and authenticate each time anymore. The connections need to be re-authorised every 3 months. Toshl will send you a notification when that’s due.
• The authentication is done directly with the bank. When you connect one of these new connections, the bank’s website or mobile app will open and you enter your credentials there. This approach is preferable as your credentials only need to be stored and checked by the bank, we and our bank connection partners only get the confirmation that you have logged in successfully and transaction data to import.
• Such connections are much faster to update. As before, they’ll update at least daily and more often if you open the Toshl app frequently. Whenever you open the app, and the connection hasn’t been updated in the last hour, it will try updating it again, up to 4 updates per day.

Any downside?

• While mostly available, some rare banks do not yet include credit card accounts in the API connection. Often, this is based on technical limitations or uncoordinated opinions by national regulators. As this goes against both the spirit and the letter of the PSD2 EU directive we expect these initial omissions to be resolved in the future.
• There can be some other transitional issues, usually depending on how the new connections were implemented on the bank’s side. If you experience any issues with authentication or details of transactions, contact us via support and we’ll try to resolve the issues together with the bank and our bank connection partners.

How do I add these new connections?

Just search for your bank in Main menu / Bank connections and click on it. Where newer API-based connections are available, we’ve already set the new API connection as the default one.

The bank’s authentication will open up, just follow the steps. Once you finish, you’ll be asked if you want to import all the past data, or only some. Once you confirm, the new accounts and transactions will import automatically.

What about my existing bank connections? How can I switch to the new API-based ones?

Your existing bank connections will remain as they are. If the new API type of connection is now available and you would like to switch, you would need to add it as a new connection.

One thing to note, is that the new connection will also add new financial accounts to import on. To avoid overlap of transactions with your earlier accounts, make sure to set the new connection to only import from a certain date onward. Set it to the last day for which you have the data from your older connection.

When your new accounts have imported the data, you can simply merge them with the older accounts and unify them again.
To merge accounts, click Edit below the account list, then Edit again next to the individual account. You’ll see the Merge option there. Set the merged account to keep updating from the new connection.

How do I know which connections are API-based?

When searching for banks, a grey API icon will appear on the right of the results.

To check whether existing connections are API-based, click Edit on the bank connection list. If this notice appears on the Edit form, the connection is done over API.

Got any examples of new connections?

Sure, but all the new 1418 connections would be hard to list. The total of API-based connections on offer is currently 1534. A large part of the number are also regional variations of the same bank federation, like Raifeissen in Germany, Crédit Agricole in France etc.

For example, we’ve added banks for the first time in Slovenia, Luxembourg, Greece, Cyprus. We’ve replaced and added heaps of them in Germany, Italy, the Netherlands, Poland, Czechia, Belgium, Spain…

Among the widely used multi-country connections, N26 is now API-based and fully automatic, Revolut has been for a while, bunq is new, TransferWise was also a recent addition…

Why only in the European Union? Why aren’t all the bank connections like that?

To connect with a bank as described above, the bank needs to provide tools, for us to be able to connect like that. As very few banks are in that much of a cooperative mood on their own (to put it mildly), legislation is needed to ensure that people have access to their own data stored at the bank. They can then enable other financial services (like Toshl) to access those data in order to provide services. Sorting out and tracking your finances, in Toshl’s case.

In 2015 the European Union adopted the Payment Services Directive 2 (PSD2), which obliges all the banks in the EU to provide APIs to access account information. With the time needed to get that directive transposed into national laws and for it to enter fully into force, we’re now finally seeing the real fruits of that labour.

There are similar initiatives going on in other parts of the world. In the long-EU-departing UK, there’s Open Banking that adheres to the same principles as PSD2 and is still part of the EU scheme. Similar initiatives are gradually taking place in Australia, Brazil, Mexico, India, Ukraine, Canada and elsewhere. However, most are still in the legislative phases and will need some time before they can be used in practice. For the time being, we remain rather doubtful of the US’ industry-led approach, as the voluntary nature of such integrations doesn’t really ensure a level playing field and full availability for all banks and financial institutions.

Do you enjoy posing yourself questions and answering them? Do you get some sort of perverse pleasure out of this?

Yes, very much so. Thank you for asking.

Let’s say you withdraw cash from your bank account at your local ATM*.

If you have that bank account connected to Toshl, the expense for that withdrawal will be imported automatically.

However, an ATM withdrawal isn’t really an expense for you, is it? It should really be a transfer from your bank account to the Cash account. You still own that money, just in a different form.

Before, you had to click on that ATM withdrawal expense, click Make transfer and link it to the Cash account where it ended up.

Now, that whole process is done automatically. Toshl will detect that the expense is an ATM withdrawal and automatically save it as a transfer to Cash.

This way, it will already be noted correctly, no adjustments needed.

We worked with many scenarios and data to predict such cases. As banks report this in many different ways and your wallet for cash doesn’t say much at all, it could be that we missed one or two. If you still find an ATM withdrawal on a connected account, which wasn’t made into a transfer automatically, please let us know. Send the details of the transaction to support@toshl.com and we’ll make adjustments to make sure they get detected in the future.

*By ATM we of course mean an Automated Teller Machine, bankomat, geldautomatc, cajero automático or however you call it locally. If your mind automatically went elsewhere, get it out of the gutter, then come back. 😉