How is Open Banking impacting the payments landscape?

The techUK/OBIE webinar gathered about 170 live attendees, providing an ideal platform for speakers from Currensea, Solace, Ordo, OBIE and Nuapay to showcase the value of Open Banking in the payments landscape through demos and use cases.

Following quickfire presentations, panellists and attendees engaged in a discussion, moderated by Louise Beaumont – Chair of techUK’s Open Banking & Payments Working Group, on a variety of topics including the scope of Open Banking in payments, the critical importance of payments and next steps.

More than just e-commerce…

e-commerce is an obvious area for the emergence of Open Banking powered payments, but it goes far beyond this use case. Open Banking remains at the beginning of its development and we are yet to see many new possible applications.

Nick Raper, Head of UK, Nuapay, confirmed it is not just a new checkout system on shopping sites. There are underserved areas, such as the bill-pay sector and insurance with opportunities to develop solutions for these channels such as pay by link or QR codes. We can also see Open Banking take off in other sectors such as SMEs, charities, and Government.

It is the entire customer journey where OB powered solutions can also really create value. Another aspect is to simplify and improve the reconciliation process. 

Alan Ainsworth, Head of Policy, OBIE, explained that teams at OBIE are looking of use cases beyond e-commerce. Government including HMRC could greatly benefit from Open Banking application, but also companies in the utilities sector. Lately, OBIE has witnessed a significant uptick in payments to charities using OB in the context of the pandemic. 

Craig Tillotson, Co-founder & CEO, Ordo, explained that payments innovation can be delivered now by competition - the big industry programmes should be a thing of the past. The payments initiation component of OB means that for the first-time innovative payments solutions with cross industry reach can be created independently.  

Specifically, the ‘lowest common denominator/incumbent funded programmes’ are no longer needed.  Request for Payment services can be delivered with open banking to every business and every consumer without bank participation or coordination.  

Open Banking powered payments: two use cases

Craig Goulding, co-founder, Currensea

Craig explained how Currensea works and what it is about: a simple and easy way to spend when you travel with the same bank account, but with a different card enabled by Open Banking.

Currensea customers are issued a new card which connects to their existing bank account and can save over 85% on bank charges. It has so far been used in 180 countries and customers have transacted in over 65 currencies.

The company does not keep balance and it is not e-money. It is money held in existing bank accounts. Currensea vision is to be the mainstream rail for customers to spend their own money in foreign currencies.

Dr Aiken Leung, VP Business Development, Solace

Solace recognises that as our lives are event-driven so must be our systems and apps. The company developed a platform to enable event-driven processes in Open Banking APIs.

Any app can subscribe to the platform which connects to legacy systems as well as new apps. This new platform enables rich personalised experiences, empowering customers to use financial services for all their needs. The company WeBank uses Solace’s services to provides their customers with better and simpler customer journeys.

Innovation is irrelevant without adoption

There are many benefits stemming from the use of OB in payments, with simpler and cost-effective processes, as well as secure transactions. There is a lot of interest from a corporate perspective, Nick emphasised. 

There is a definite need to work on messaging and get customers to adopt the new methods, make first payments. Payments methods is cultural and has a lot to do with habits. With time, clear associated benefits and communications, OB-powered payments can take off.

Alan added that OBIE has developed a revised roadmap to ensure all the basic problems are fixed and that the APIs are working to the best standard. Performance is key, but also looking at new functionalities such as refunds or recurring payments.

To bolster innovation, it is vital that the whole ecosystem puts its weight behind it, Craig asserted, and that the issues are fixed promptly with incumbents recognising payment initiation as critical. It is also very important to ensure communication around the security of OB powered payments.

Why push on?...

It is still early days for Open Banking in the United Kingdom, but also across the globe. Therefore, it is not surprising that the payments aspect of OB has not properly taken off – 1% of OB’s API calls are payments. But we are seeing more and more volumes of OB powered payments being made and many use cases emerging.

Use cases will emerge and, in the meantime, it is vital to:

  • protect the ecosystem and tackle fraud
  • improve performance
  • communicate benefits and use of OB to customers
  • work on additional functionalities such as refunds and recurring payments 
  • Hugo Rousseau

    Hugo Rousseau

    Programme Manager | Financial Services and Payments
    T 020 7331 2054

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