Why Open Banking will help safeguard online gambling

Max Emilson, CRO of specialist provider of financial APIs, TrueLayer, writes for Payment Expert on how Open Banking can help online gambling flourish through safer, better experiences

Online gambling has flourished for years and has an opportunity to accelerate on the back of lockdown that has temporarily, or in some cases permanently, closed venues that normally generate 50% of the overall market (excluding lotteries).

With an influx of new users, concerns around safety and player wellbeing will understandably continue to dominate media narratives about the sector with tales of mental health problems, relationship difficulties and large-scale financial loss.

According to the National Audit Office there are almost 2 million ‘at risk’ gamblers in the UK, including approximately 395,000 ‘problem’ gamblers that includes 55,000 children some as young as 11. This has led to calls for increased funding for the Gamling Commission and increased oversight by The Department for Digital, Culture, Media & Sport (DCMS).

The increased attention of the sector and calls for greater social responsibility reinforces the importance of ensuring safeguards are in place to support these people. 

Savvy operators are now looking to add Open Banking capabilities to their platforms, to safeguard players and gain a range of additional benefits. Not only does it allow operators to access real time data to understand their player’s spend behaviour, but it also offers an opportunity for their platforms to deliver more personalised and innovative player experiences while reducing the risk to both themselves and their players.

There are three ways that Open Banking can support safer gambling; affordability checks during onboarding, payment limits, and player data insights. 

Let’s take onboarding. Open Banking makes onboarding customers safer. Currently, the European Gambling Commission requires players to confirm their age and identity to the operator within 72 hours before playing games or depositing funds. Open Banking can reduce this to minutes, allowing operators to flag fraudulent activities early on. To flag at-risk players early on, Operators can securely, and with consent, gain access to financial data to confirm whether that person has a balance in their current bank account.

Operators can also quickly verify players by matching the details of the bank account owner, to help meet Know Your Customer (KYC) and AML regulations and reduce the risk of fraudulent behaviour. With different rules and regulations across Europe, being able to adhere to country specific regulations is a huge boon for compliance, and this significant cost and time savings for many operators is an additional benefit. 

When it comes to processing player payments, a key benefit of Open Banking is the ability to link an operator directly to a customer’s bank account. This is unlike screen-scraping where you can access bank accounts without the bank knowing as it looks like a normal transaction. 

This further helps to reduce operational risk and cost for operators, while optimising the customer experience for casual players. By connecting with a customer’s bank account, the customer can top up and withdraw funds seamlessly using Payment Initiation services. Customers are not redirected to an e-payment interface, it all happens within the operator’s app or website so long as the customer has authorised the operator to be a trusted holder of login and transfer credentials.

Finally, and most importantly, Open Banking could provide the data insights that helps operators analyse how a customer spends and saves their money, whilst also monitoring how that customer is behaving on their platform. 

For example, betting large amounts regularly may not be problematic, but by understanding factors such as what proportion of the customer’s income has been spent, how many other places they are gambling, how it relates to their other outgoings or the timing of their regular pay, operators can quickly hone in on an individual’s behaviour before it reaches a crisis point. Operators can put safeguards in place immediately to make sure customers don’t incur charges they cannot pay off. They can also automatically refer them to third party support groups or ensure that the customer cannot deposit any more money. 

The European Gambling Commission’s latest set of rules mean it is imperative for online gambling operators to identify their customers, complete a risk-assessment, apply age limits, and, in some countries, money limits, as well as keeping their customers safe before allowing customers to play. The ability to seamlessly categorise the data the operator receives, via Open Banking, allows them to segment players and put these responsible gambling rules and initiatives in place, such as risk-based criteria and affordability checks. 

These are the most obvious safe gambling benefits Open Banking offers online gambling. Opening up access to a customer’s financial life provides operators with tools they can use to then develop data-led services to create safer and more personalised experiences that could reduce churn, increase brand loyalty, and reduce risks for both operators and players.