The aim of Open Banking is essentially to create a cohesive picture of a consumer’s finances, through the partnership of traditional banks and third-party providers (TPPs). 

These entities work together through application programming interfaces (APIs) in order to offer new and innovative solutions in an ever-changing world. As the rise of Open Banking accelerates, how can the e-commerce sector harness the opportunities it brings? Worldline’s Head of Product Management Digital Commerce, Eline Blomme shares some insight.

Payment Expert: First off, tell us more about your role and the offering? 

Eline Blomme: As the Head of Product Management Digital Commerce at Worldline, I am at the very forefront of product development for the organisation’s e-commerce division which focuses on enterprise level merchants. 

Recently, we launched a new account-to-account (A2A) payment solution that enables online businesses to introduce their own custom-branded payment method. This solution is built using Open Banking technology which nimbly allows third parties to access consumer banking information that was previously only held by banks. Our solution’s payment methods also come with the added benefits of custom branding, instant settlement notification, low fees and comprehensive coverage.

PE: Open Banking has changed the finance and payment industry significantly, can you tell us more about the benefits this can bring? 

EB: Open Banking is increasingly transforming financial services and, within that space, how we facilitate payments. In an environment that demands speed, efficiency and choice, this allows merchants to offer new, cost-effective and digitally friendly payment methods. Open Banking also provides e-commerce businesses with invaluable insight into consumer financial behaviour which brings with it a wealth of advantages such as customer credit scoring and personalisation.

The benefits of Open Banking and in particular, branded solutions, increase competitivity in a multitude of ways. By having direct access to a customer’s account information, e-commerce players can provide direct payments for customers whilst removing chargebacks, build long-lasting engagement and integrate customer data within the checkout process.

In essence, this cutting-edge technology provides a significant opportunity for business growth.

PE: What is the relationship between PSD2 and Open Banking?

EB: Whilst the two are often confused, Open Banking is essentially the technology that has been developed in response to the Second Payment Services Directive (PSD2). In light of Open Banking’s potential, the UK’s Competition and Markets Authority (CMA) and the EU have both instructed that companies adopt the technology as a necessity. 

The introduction of PSD2 is an important step towards the creation of a Digital Single Market in Europe, which aims to make the marketplace fit for an evolving digital age. As a result, it is a key driving force behind innovation and ideas. At the centre of this process is traditional banks freeing up their payment services for the benefit of other companies or ‘Third Party Payment Services Providers’ (TPPs). 

Now fully deployed, as of December 2020, Open Banking has the capability to bolster the economy by combining flexibility with security.

PE: What’s next for Open Banking?

EB: The most exciting opportunities in Open Banking are centred around data. Banking APIs provide access to vast amounts of customer information which helps online businesses create and, more importantly, customise a wealth of exciting applications to help enhance. This is really just the first step into a transparent and open future full of choice for the customer and their needs. 

However, it doesn’t stop at just banking – as we continue on the road towards a world of open data, there are prospects for any industry to realise the same benefits, anywhere where consumer data is involved. The crux of it all is the creation of an opportunity to provide better, fairer financial services for all.”

Banking APIs provide online businesses and TPPs with access to vast amounts of rich customer financial data. And with that comes the possibility for all kinds of stimulating applications which benefits both parties significantly. 

The future is bright when it comes to Open Banking. We could start to see the introduction of applications that harness AI-enabled ‘predictive banking’, anticipating customer demand in advance and deploying intelligent personalised Direct Debits that truly take the customer’s individual needs into account. 

PE: How do you think Open Banking could impact high risk sectors when it comes to user engagement? 

EB: High risk sectors can benefit from Open Banking greatly because it allows them to access real time data delivering tailored customer experiences. Ultimately, enabling access to a customer’s financial life provides online businesses with a comprehensive toolkit that can be used to develop data-led services, creating safer and more personalised journeys.