How forward-thinking brands have put open banking payments into action

Andy Tweddle, Payments writer
15 Jul 2021

When talking about open banking, we’re often laser-focused on what we still need to build and how that will help businesses and consumers of the future. But pausing to reflect on what open banking-powered products already exist, helps us understand the scale of the opportunity that still lies ahead.

And according to JP Morgan, digital payments in ecommerce alone will reach €940billion in the UK and EU by 2023. Instant bank transfers (powered by open banking) have emerged as a low-cost and low-friction alternative to existing digital payment options.

So how have businesses already taken advantage of instant bank transfers? TrueLayer CPO, Ossama Soliman, spoke with product leads and founders of some of Europe’s forward-thinking brands to look at how they’ve been able to turn open banking potential into real payment experiences.

He was joined by:

  • Olivia Denyer, Product Lead at iwocaPay

  • Ricky Lee, Founder & CEO at sync.

  • Josh Queen, Lead Product Manager at Penfold

This discussion took place at the 2021 Open Banking World Congress. You can watch the full recording here, but this post will look at some of the key talking points and ideas from the session.

Industries and use cases continue to multiply

iwoca allows small businesses to easily and quickly borrow money, while sync. lets users budget and manage their money in one dashboard. Penfold is a digital alternative to traditional pension companies.

None of these businesses operate in the same industry and each has a different use case for instant bank transfers – but all three businesses have found value from them.

Open banking use cases among TrueLayer customers shows the diversity of opportunities.

iwoca, for example, has turned its attention to helping small businesses get paid for the work they’re doing. Businesses often offer customers at least 30 days to pay, and even then invoices are regularly paid late. As Olivia Denyer, iwocaPay’s Product Lead explains: “It puts a massive strain on cash flow, and the relationship between businesses and their customers.”

iwocaPay has been built to tackle this problem. It lets payers pay in three instalments, with iwoca paying the supplier in full upfront.

But to make this offering as effective as possible, iwoca wanted to offer a payment option that was as easy as paying by card and as secure as a manual bank transfer. Instant bank transfers, powered by open banking, have met these requirements for both iwoca and its customers.

Open banking gives customer-centric businesses an on-brand payment experience

According to Josh Queen, Lead Product Manager at Penfold, the pensions industry “has been left relatively unscathed by the customer-centric product revolution that’s happened in the financial services industry in this country in the last 15 or 20 years”. But with Penfold and other challenger brands, things are finally changing.

Penfold allows users to set up their account in about 10 minutes. This is a world away from the complicated, paper-based pensions providers that have dominated the industry for so long.

“Pensions is an area that's massively important for the financial wellbeing of pretty much every person in the UK, often approached with apprehension, and in some cases outright fear because of the traditional experience of setting up accounts.”

But the drawbacks of incumbent payment methods like manual bank transfers sit awkwardly with Penfold’s ethos of good customer experience. Because card fees are simply too high, the only other option for Penfold until recently has been Direct Debit, which can take up to 5 days to settle, leaving customers frustrated.

Instant bank transfers, powered by open banking, give the likes of Penfold a payment option that’s affordable for businesses, straightforward for customers and secure for all parties (thanks to baked-in strong customer authentication).

Global open banking adoption creates even more opportunities

While PSD2 has led to open banking APIs in both the UK and the EU, with similar legislation appearing around the world, it’s the UK which has seen the most traction with open banking, reaching 315 regulated providers as of May 2021. But as other countries ‘catch up’ to the UK, we’ll see open banking truly go global.

Take sync. as an example. sync. provides a simple and secure way to manage your finances by giving you complete control of your financial life in one app. As part of its partnership with TrueLayer, sync. customers can use instant bank transfers to send money to anyone, without having to enter card details or share their bank credentials.

sync has a particular focus on customers with accounts in multiple countries, offering a way to connect accounts (and transfer money) with a simple, high quality experience.

sync. is already live in the UK and Europe but as open banking APIs around the world improve, sync. can cater to more users.

Ricky Lee, sync. CEO & Founder, adds: “We're doing open banking payments in the UK now – for example I can move money from Lloyds bank to HSBC through sync., but our end goal this year is: how can I move money from my LLoyds Bank in the UK to, for example, my Euro BBVA bank account – eliminating the need for money transfer companies.”

Banks and businesses need to make sure every payer is brought along on the open banking journey

Looking ahead, there was total agreement from all involved that instant bank transfers would continue to find traction among more and more businesses. But the need to make open banking accessible to everyone is keenly felt.

iwocaPay’s Olivia Denyer feels that responsibility for this ultimately falls on the banks. “We’re not removing the banks from the equation here, we’re building around them. The people who are most at risk of being excluded from this process are the ones who struggle to access their bank.”

She also points out that product builders have a responsibility to make open-banking powered products as accessible as possible. They also need to consider how to carry out processes like verification, if some users don’t have ready access to documentation such as a passport.

Watch the full recording of this panel session from the Open Banking World Congress or read our definitive guide to open banking.

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