Open Banking: Changing Lives for the Better
Open Banking is revolutionising the financial world by giving consumers control over payment information and financial data. Open Banking aims to move power over data from the traditional banks and place it into the hands of consumers says our guest Ruwani Hewa, Product and Propositions Director for NuaPay.
She also added that this shift empowers consumers to initiate direct payments from their bank accounts, making the transitions into online transactions less cumbersome and smoother.
Use Cases That Have Stood Out
One of the most compelling use cases discussed during the podcast was the ease of e-commerce transactions. Imagine not having to deal with the hassle of entering card details or dealing with filling in payee details.
Whereas you can seamlessly make payment initiations directly from consumer bank accounts. This reduces friction enhances user experience and boosts merchant satisfaction as the number of cart abandonments drops.
Success Stories Worth Mentioning
Ruwani shares a brilliant success story involving car dealerships. Typically, car dealerships are burdened with hefty interchange fees on transactions made by cards. So, these dealerships found a solution to it in open banking. Sending a ‘pay by link’ to consumers enables dealerships to receive direct bank transfers, saving them up to 75% in merchant service fees. This leads to a win-win situation leaving dealerships with lower costs and customers with hassle-free payment processes.
It’s Not all Hale & Hearty
Despite its success, the widespread adoption of Open Banking isn’t without its hurdles. Ruwani touches a point on the need for a ‘TFL model’ – a pivotal event that drives mass adoption.
Just as the success of contactless payments was seen after being implemented in London’s transport system, open banking could also make do with a similar catalyst. However, here lies the challenge in creating a seamless, compelling use case that would resonate with consumers and merchants alike.
Will Europe & UK Ever be on the Same Page
Despite the immense potential, it does not come without challenges. To begin with, the lack of standardising across various regions can be a difficult task. The UK on one side has made strides in standardising APIs, but on the other Europe continues to lack this due to variations in regulations and technical specifications which can make things tricky. It is crucial in such cases that there is a unified approach for open banking to reach its full potential.
What Lies Ahead!
Moving from PSD2 to PSD3 brings along with it hope for better standardisation and improved consumer protection.
Ensuring effortless peer-to-peer payments happen just as easily as sending a text. Just imagine a clunky-free process of entering bank details and being able to pay just by using their mobile number. It’s high time that the UK caught up to countries like Brazil and Spain which are already leading the way with similar systems and expanding on them.
Final Thoughts
With open banking paving the way there is a future of a more efficient, consumer-friendly financial ecosystem. It’s about giving consumers the ability to make choices and make financial transactions smoother. Thanks to the insight shared by Ruwani, we’re well on our way.
Do check out our other Season 1 podcast on Unveiling Finance to get some exciting info. Also, stay tuned for Season 2, it’s going to be exciting!
For more information visit us @ www.Technoxander.com.
