Open Banking and AI: Unpacking two of fintech’s biggest talking points

The floor of any industry trade show or conference is the ideal place to gain some insights into where businesses are heading, which markets are the big targets, and which products or technologies people are hedging their bets on.

ICE London 2024 was no exception, as a plethora of payments firms, consultancies, betting suppliers, solutions developers and slot producers descended on the ExCel centre in Tower Hamlets to close deals, network and – fortunately for Payment Expert – talk to the media.

Whilst walking the halls of the ExCel earlier this month, the Payment Expert team noticed key terms that kept coming up, two unsurprising terms given how extensive publicity has been around them in 2023 – these were Open Banking and Artificial Intelligence.

A technology that has emerged only in the last few years, Open Banking has been taking the world of finance by storm with some of the world’s most high profile banks – NatWest being one example – eyeing up opportunities.

The phenomen’s potential, however, has not been lost on the igaming sector either. Having a broad range of payment methods in an operator’s toolkit is a valuable way to stand out from the competition in today’s digitised industry, and firm’s such as William Hill, among others, have been recognising this.

“Open Banking adoption has been doubling year on year for the last five years in the UK and  it’s a technology that’s there to stay,” said TrueLayer’s VP of igaming, Roberto Villani, during a conversation with Payment Expert at ICE.

“I think what’s really driving that is the UX and the usability of the service. There’s a sense of affinity between innovation and the gaming industry and I think Open Banking really sits in the middle of those two, it’s very fit for purpose when it comes to the digital journey of the players.”

Moving away from Open Banking, the second term that has defined discussion in the payments space – and the igaming space too for that matter – is artificial intelligence (AI), and what benefits the technology can bring.

AI is a topic Payment Expert is hardly unfamiliar with because of the extensive discourse around the technology’s development. AI is currently utilised for a range of day-to-day purposes in finance, such as risk management and quantitative trading, but its potential for fraud is also often emphasised by its proponents.

For SEON, a firm which specialises in fraud detection and prevention, utilising new tech for this purpose is understanding an important area. SEON’s Director of Brand, Product and Marketing Growth, Amanada Lieu, explained the benefits automation can bring, but noted that human judgement is also always essential to the anti-fraud process.

“You can lean on automation to strengthen fraud and risk teams’ resources. It can mean you don’t have to spend so much on hiring or training up a large team.”

“AI can help you operate a fraud and risk team without having to invest massive resources in big teams. There is a time and place for automation with AI and still leaning on human judgement for some of the more important cases.” 

“AI is not there to replace entire fraud teams yet, but is a way to offset costs. Fraud is not just a fraud team’s problem, it’s a business problem.” 

However, with all the development AI has seen in recent years, the full potential of the tech has not yet been fully released, and Lieu emphasised her belief that human judgement is still essential in fighting fraud.

“We are not at a stage where AI can outsmart human judgement yet,” she continued. “Fraudsters use AI to create higher volumes of attacks and for efficiency, but human judgement still plays a stronger part in planning and stopping strategic attacks. AI should be used to counter mass AI attacks.”

As we move further into 2024, AI continues to capture technology news headlines. In the UK, for example, the Bank of England has weighed in the discussion with the bank’s Governor, Andrew Bailey, noting both ‘great benefits’ but also risks associated with the tech.

Meanwhile, various British financial stakeholders have voiced their views on the matter, such as to the Parliament Street think tank. At the political level, the governing Conservatives have pledged funding for tech development, including AI, whilst the opposition Labour Party has also placed it as a key pillar of its fintech policies.

This hype and publicity around AI may be the problem, however, when it comes to development of effective anti-fraud tools. SEON’s Daniel Sebes, Director of Strategic Growth, explained his viewpoint on the matter.

“The risk industry on the whole is known to go from fundraising cycle to fundraising cycle, meaning that what most companies in this space have developed in the last five to 10 years are the things that are the hottest. 

“Look at what any new risk company is making today, it’s all gen AI, because that’s what gets you the largest investment in the shortest span of time today. But it’s not necessarily what your customers most need.”

Sebes then added on his colleague Lieu’s comment about the importance of the human element.

“We are reaching a point where it is less of a technology challenge, meaning the building blocks are there, but more of a human challenge – can I write a playbook and coach people to take advantage of AI? The technology is there, but the knowhow of how to best utilise it in various industries doesn’t quite exist yet.”

“AI doesn’t have to be the most complicated thing a company utilises, so long as you really have the right playbook and can coach people through it, and have this motion to take someone who hasn’t had any experience using AI all the way to enabling that person to incorporate AI tools into their everyday work flow through the playbook.”

AI is clearly a focus of both government and private enterprise in 2024, as Payment Expert’s observations with many companies – not just SEON and TrueLayer – unearthed at ICE earlier this month.

So is Open Banking though. As noted above, AI was one of the two pillars of Labour’s fintech policy, unveiled towards the end of January as the UK heads deeper into what is almost certainly an election year.

For Labour, Open Banking will, in the party’s ideal vision at least, ‘unlock the potential for increased competition in retail payments’ whilst benefiting both consumers and SMEs.

Again, it is important to note how the significance of Open Banking has also been felt in the gambling sector, and not just with regards to operators such as William Hill and Betfred diversifying their payments options.

The technology will play a key role in the UK government’s vision for finance risk checks, one of the Gambling Act review’s flagship player protection solutions. Open Banking will be utilised in cases of ‘enhanced checks’, as reiterated by DCMS and Carolyn Harris MP in a parliamentary debate this week.

TrueLayer’s Villani concluded: “When it comes to the White Paper, Open Banking was mentioned as one of the possible routes to a smoother affordability process, and I strongly believe that operators and end users want to have a smoother affordability process in place. 

“I think Open Banking can help achieve that by simplifying the process by which a player shares their transaction or banking information. 

“It’s sent to the operator in a more digital friendly way, which allows the operator to take that information and make an assessment as to whether that player should essentially pass the affordability check. I think it’s a great alternative to the manual process.”