In this recent webinar, Open banking payments: are we at the start of the hockey stick? Yolt CEO Nicolas Weng Kan was joined by Kane Harrison, CEO of Wombat Invest, Aseem Munshi, CEO of Updraft, and Hasnain Bukhari, Product Strategy & Engineering Lead, Lightyear. This post is a summary of some of the key takeaways - with the full webinar available at the link below.
The hockey stick has already begun
It has been noted by many industry experts that open banking-powered innovation is more of a slow burn than a lightning bolt. And this has been true of the payments side of things.
However, there are strong signals that we may be at an inflection point. According to Nic Weng Kan, open banking payment transaction volume has increased by almost 800% year-on-year, from 280,000 transactions per month to 2.1 million transactions per month. Other panellists are also very optimistic on growth. “I’m incredibly bullish on open banking payments as a whole,” said Hasnain Bukhari, Product Strategy & Engineering Lead at Lightyear.
"I’m incredibly bullish on open banking payments as a whole."
Consumers are demanding it
While many of us may think of open banking as something still in its infancy - especially in terms of public awareness - one thing that consumers do understand very well is convenience. And for the fintechs joining the webinar, the convenience of open banking payments is being seen as a baseline, rather than a nice-to-have.
“We under-estimated open banking payments at the start. But people really want open banking payments, because everybody expects to be able to just hit a button and have their account pop up instantly, with no filling out of details, and no test transfers,” said Hasnain Bukhari.
Kane Harrison concurred. “People want to fund their accounts instantly. Bank transfers take 2-4 hours. But with open banking payments it takes 40 seconds.”
There is a wide range of use cases
A number of proof points and use cases - not always obvious - came through from the webinar guests. For example, Wombat is seeing an increase in deposit frequency AND average amounts with open banking payments. CEO Kane Harrison puts this down to user confidence - that the ease of use means users are not afraid they may accidentally enter the wrong details. This encourages them to make deposits that are bigger and more frequent. One a similar note, Nic Weng Kan discussed a charity that saw donation sizes increase once it communicated to potential donors that the low transaction fees meant that all their donated money would find its way to a good cause.
But perhaps one of the more intriguing use cases is around pairing open banking payments with Account Information Services (AIS). Nic noted that in the UK, 10% of employees are paid every two weeks, yet most bills are monthly. With the right account information, lenders, utilities, and other service providers can bill customers on exactly the right day to ensure a maximum chance of payment, driving down the cost of debt collection and of doing business. Alternatively, Aseem Munshi discussed how Updraft is nudging its customers to make more repayments on their credit cards when they see the customer has spare cash in their account. The consensus was that use cases and innovation is only going to expand in the coming years.
The technology is ready. Understanding the benefits of using them at scale will accelerate mass adoption.
In spite of the promising signs, there are areas for improvement, including standardisation of APIs and bank payment flows, questions around how to best educate consumers, and so on. These topics and more are also discussed in the webinar itself. To listen to the full recording, click the button below, or to discuss how open banking payments can help your business, contact us.
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