Like many financial innovations, open banking still seemed exotic in 2018 when momentum began building. What the sector didn’t foresee was a global crisis propelling the need for new forms of digital “anywhere” payments and finance that pushed fast-forward on open banking.
Exploring very real aspects of the topic as it stands now, PYMNTS June 2021 report Open eCommerce: Open Banking As The New eCommerce Accelerator In The U.K. And Europe, a TrueLayer collaboration, is a compendium of insights about this important sector and topic.
“The most advanced open banking solutions provide brands, retailers and marketplaces with an agile, plug-and-play payments and financial data architecture. Open banking APIs allow eCommerce businesses to tap into real-time banking data to power customer engagement initiatives. Marketplaces can quickly verify sellers through secure bank-to-bank channels and sustainably grow their audience reach,” per the report. And that’s just the tip of the iceberg.
Turning to the U.K. and Europe — where disruptors got a head start on other regions — open banking is finding its place in the rich and diverse mix of payments and digital-first solutions that are shaking off legacy constraints with interoperable ease.
Disrupting Risk, Identity And Fraud With Open Data
The June edition of Open eCommerce provides valuable perspectives on how payment service providers (PSPs) in particular are themselves innovating with connected banking in ways that weren’t possible until now.
With the use case of payment services provider Helcim as an example of how PSPs view the proliferation of open banking in the U.S. — and hurdles remaining to implementation — Chief Operating Officer Rob Park told PYMNTS, “Payment providers like Helcim that are comfortable with the idea of disrupting the market are primed to embrace open banking. The adoption of an open banking system would make it easier for payment companies to evaluate risk, identify fraud and improve their customer experience.”
Ultimately, he sees open banking as a consumer win, but PSPs, FinTechs and modernizing legacy banks all have much to gain by API-powered connected economy banking architectures.
“Open banking can drastically improve the service quality and security for consumers and give them more discretion over how and where their data is used,” Park said. “Open banking provides new ways to interact with customers and provide services, but, by and large, if delivered properly, it’s going to open up more options and give better experiences to the consumers and end users.”
Better Access, Better Information
As to what PSPs in the U.S. can expect when open banking goes big here — it’s virtually upon us now — Open eCommerce reminds us that it’s all about data.
“Using an open banking API, businesses can gain access to granular insights on consumer shopping behaviors in aggregate, which can greatly enhance the relevance and engagement potential of customer loyalty initiatives and service features,” per the new report.
“Better access to consumer preferences and behavioral information provided by open banking data also means that these businesses can create innovation strategies based on data rather than guesswork. Open banking technology is an opportunity for PSPs to innovate rapidly in response to new client demands. PSPs can use open banking technology to provide instant payment solutions that are secure and offer robust performance as businesses grow, whether supporting a delivery service seeking to offer instant tip payments to employees or a small local restaurant launching a buy online, pickup in store (BOPIS) service.”