I know a bit about Open Banking and aftera panel session yesterday it became to me the true state of things in the UK/EU.
There’s a lot of hype around Open Bankingtout that it will bring the end of card based commerce, direct debits and other payment methods. Well, if this does happen (which I don’t think it will), it won’t be for a long time yet.
We’re all waitingto add features and digital experiences. This is a massive bottleneck, but nobody else in the chain can they provide a consistent way to achieve it.
Which brings me to probably the biggest underlying issue – nobody is mandating the payment method feature set orstandards for things like customer experience. If we look at India and UPI, it’s phenomenal what they’ve done in terms of traction and it all comes down to the National Payments Corporation setting the agenda and the form. Open Banking payments in the UK and EU a dribbling mess in comparison, so beyond the above the question is why?..
Well firstly, because there’s no commercial incentivisation, there are a number of players in the chain and yet OB payments might be charged at 5p. And if they runPayment rails, this might cost 75p, but who’s and accept these ? In something like the interchange ++ model that the card schemes use. Again, it’s about standardisation.
The go-to-market approachOB B2C channels. I get the idea that if you get consumer adoption you get salience and businesses will follow. But is there any to disrupt consumer card usage in markets like the UK? OB payments better suited to accelerating Improving digital transformation and cashflow for businesses. Not to mention that the B2B commerce opportunity is larger and frog the consumer state.
The major missing feature is VRP (Variable Recurring Payments) – the ability to save the payment method and charge it later. Natwest have a merchant live with VRP, but they’re the only bank (apparently) thatthe functionality and therefore how can an Open Banking Fintech roll this out? They can’t. I did discover, however that you can schedule future the initial authentication; this is helpful, but it requires the merchant to know the value of those future payments plus the schedule. Seems like fit for B2B In truth, VRP is two years away, or until the banks sort themselves out.
Wallet adoption doesn’t exist yet (which is how I pay for everything now), UPI has been so successful IMO becauseI spoke to some Indian guys I met at Web told me that they pay for EVERYTHING via their Google Wallet. It’s all recorded in one central ledger, it was amazing. Their utility bills, their shopping, all consolidated within the wallet and with payment method choice. It’s difficult to imagine Open Banking in the UK/EU this
Open Banking payments aren’t running on somesuper highway, they’re running over existing there’s technical and commercial complexity when dealing with different networks, something already solved by card schemes…
You can’tOpen Banking. For example, you can’t pass basket items like you can with cards over the network… Again, why are you after B2C retail when you fall short of the requirements?!
hyped as a major benefit to Open Banking, but already fraudsters are getting around the SCA mandate in the EU with AI. Not to mention accounts need to be KYC’d in the first place. This problem has birthed some new security players, but of course, this comes at a cost… ‘Oh but OB is so cheap!’ Well, it won’t be for long.
I hope youthis helpful and a lot of fog out there. Open Banking – great idea, left to a of bankers to lead with no commercial incentive results in a rollout and lack of customer centricity. But 7m people in the UK have used it, not sure if 7m people love it.
Let me know if youdifferent.