Open Banking, though widely discussed as an emerging payment technology, especially alongside innovations like AI and blockchain, has seen relatively low adoption compared to its potential. In recent times, there has been a significant push to integrate Open Banking into the gambling industry, with the belief that it could bring various enhancements to the sector, such as improved payment processing, security, and player experience.
However, during a panel discussion at the Payment Expert Summit in Lisbon, industry experts concluded that, so far, Open Banking has not been successful in delivering the expected results for the gambling sector. It seems there is still some way to go before the ambitions some gaming stakeholders have for Open Banking become reality.
Rahul Das, Director of Payments at LiveScore, made his opinion clear, describing Open Banking as “too complex” and a technology that promises a lot but delivers very little.
On paper, there are a lot of advantages such as transparency and affordability. The technology allows operators to access customer data, which wouldn’t be possible with other payment options like cards.
Data that can be accessed includes names, transactions and all liquid assets a person owns. This is because it links all of their bank accounts together, providing a comprehensive view.
From an operator’s viewpoint, this enhances KYC (Know Your Customer) procedures and strengthens player protection. Despite this, Das somewhat contradictorily referred to it as the “gold standard of payment options.” However, the very benefits it offers also pose some of the biggest challenges in fully realising its potential within the gambling industry.
Offering a comprehensive view translates to huge amounts of data, something that Das says is a “nuisance” and creates more problems than it solves because it makes operators liable by making them handle all of this data.
Another challenge for operators is adoption. As mentioned above, each country across Europe is at its own stage of development. Leading the way are the UK, Spain and the Netherlands – a country that Das is very familiar with.
He observed that many consumers are using Open Banking, with adoption rates increasing across the board. However, all speakers on the panel agreed that Open Banking could be a hard sell to some consumers, many of whom are protective of their data.
Mark Curmi, CEO of Trumia, backed this up with the statistic that in 2023 only 10% of people have adopted Open Banking and only 30% of those people know what Open Banking is.
Another issue is that Open Banking is significantly slower compared to traditional payment methods, which is a major drawback for gambling customers who prioritise speed when depositing money.
Though Open Banking has been a success for financial institutions, these reasons are just a few that stand in the way of replicating that success in gambling. So why have regulators been keen for operators and consumers to make more use of Open Banking?
Curmi emphasised that Open Banking is only a small piece of the larger concept known as Open Finance. Open Finance allows consumers to securely access, manage and share their financial account data with any financial service provider they choose. However, this broader concept is still in the early stages of development.
He believes that a lot of these barriers to adoption will disappear after the launch of Open Finance, saying: “When Open Finance hits, it will be a different ball game”.
The panel explored short-term solutions to these challenges, one being better communication between gambling and financial regulators to help the gambling industry better understand Open Banking. Das noted that gambling regulators currently have limited knowledge in this area.
Despite his criticism of the technology, Curmi acknowledged that he wasn’t surprised by the issues, stating that “Open Banking wasn’t designed” for how the gambling industry is attempting to use it. He emphasised that operators shouldn’t focus on where Open Banking is headed but should instead prioritise greater collaboration to make it work effectively.
