From Europe to the US, Australia to India, it seems everyone in the finance industry has been talking about Open Banking this year – though the opinions expressed have been as mixed as you’d expect.
There has been a lot of talk about what Open Banking can achieve for financial institutions, other businesses and of course consumers. However, everyone seems to agree that a lot of work is needed in a lot of areas to achieve these results.
As the end of the year fast approaches, Payment Expert takes a look back at some of the standout perspectives encountered around Open Banking over the past 12 months.
Ozone API – tracking an ‘exciting frontier’
Where better to start than with a company that specialises in Open Banking? Payment Expert’s conversation with Ozone API covered a lot of familiar talking points for people with a close eye on the payments sector.
Huw Davies, the company’s Co-CEO, highlighted some unique regional use cases for Open Banking in areas like the Middle East and Latin America. However, one of his standout points was on how Open Banking should be measured and monitored as it continues to develop.
“As Open Banking propels both economic expansion and financial inclusion, measuring its tangible effects through robust metrics will be crucial.
“Prudent data points to track include API calls, venture capital invested in Open Banking-enabled fintechs, partnership levels between incumbents and innovators, and growth rates of Open Banking-related fintech roles, like API developers and compliance officers, spotlighting the ecosystem’s vibrancy.”
NatWest – the waiting game
As made clear above, the excitement about what Open Banking can achieve is palpable. This does not mean that banks are being unrealistic in their expectations and time frames though.
Speaking to Payment Expert at the Pay360 conference, NatWest Group’s Head of Group Payments Strategy and Research, Lee McNabb, spoke positively of efforts by the then-government to drive Open Banking – but added that widespread adoption is not around the corner.
“Has it got seismic adoption now? No. Will it? Yes, I think it will, but it’s quite a long journey I think. Sometimes things take a while in terms of adoption, it took nearly 10 years for contactless to become the beast that it is now. I think Open Banking can be the same, but there are some questions about the future roadmap.”
Bank of APIs – cross-sector considerations
For Open Banking adoption to accelerate, the responsibility for pushing the tech forward cannot just fall on the fintech firms developing it. Banks, regulators, tech firms, the government and consumers all need to work together, and this might not be an easy task.
Stephen Wright, Head of Regulation and Standards at Bank of APIs (part of the NatWest Group), asserted that cross-sector and regulatory cooperation needs to be stepped up if the UK’s Open Banking vision is to be achieved.
“How can you ensure there is coordination across these stakeholders – users, retailers, wallet providers? It needs to be stepped up. If you get the regulatory coordination, things tend to happen faster. If you look at change in payments, most of it is regulatory or industry standards driven.”
Emerchantpay – education, education, education
Consumers are not always the easiest group to convince, for obvious reasons. The UK alone is home to over 30 million economically active people, convincing the majority or all of these of the benefits of a new form of payments technology is not a walk in the park.
With Open Banking, especially its data sharing element, consumers require a lot of educating before more widespread adoption takes place. Jon Horddal, Chief Product Officer at emerchantpay, an omni-channel payments solutions specialist, emphasised this point.
“Banks and merchants have a responsibility to educate their customers about emerging technologies in the financial sector. It’s not good enough to simply inform consumers what these technologies are either, they need to help them to fully understand the benefits.
“Unfamiliarity breeds apprehension. Without enough knowledge, customers often hesitate to embrace new solutions; the slow adoption of Open Banking is a prime example of this. More proactive communication from banks and merchants around the advantages of Open Banking for consumers is the key to driving adoption.”
Sector specifics – betting on Open Banking?
To fully understand Open Banking’s potential but also its limitations, examining how it can be applied to specific sectors is also important. Interoperability of Open Banking has been one of the biggest talking points both within the sector and among politicians keen to see it grow.
An industry which has a lot of enthusiasm for how Open Banking can evolve is betting and gaming, a high-risk, high-volume and high-value sector which is being targeted by many Open Banking providers. Two speakers from the Payment Expert Summit offered their opinions ahead of the event.
LIveScore Group – smoothing the user experience
There has been a lot of hype, mainly from regulators but also from some betting operators, about what Open Banking can do to save the hotly-debated topic of customer affordability in gambling.
Regulators like the UK Gambling Commission (UKGC) are confident of what it can achieve. However, some commentators like Rahul Das, Director of Payments at LiveScore Group, believe that the solution needs to improve for this to work.
“The only way to smooth the user experience is through building reams of market-specific matching logic to compare identity data to information received from payment providers. The gold standard when it comes to data is Open Banking – but, in my opinion, it is still clunky, so I think players do need to be compensated in some way for the friction imposed on them.”
Adjarabet – the steps needed for success
Speaking from his perspective of the Georgian betting market, Levan Bluashvili, Deputy Director of the Service Operational Division and Head of Payment at Adjarabet, noted a number of challenges facing Open Banking.
User trust and awareness, cost of implementation, technical integration and complexity and resistance to change all need to be overcome, he says. Working with fintech firms and launching joint educational campaigns could be key to this.
“By working together on these strategies, gambling operators and fintech firms can build strong customer trust and familiarity with Open Banking. This collaboration not only drives adoption but also enhances the overall user experience, making Open Banking a valuable and trusted tool in the gambling industry.”