iGaming operators: why open banking is part of our strategy

More and more iGaming operators are enabling players to deposit through open banking. We spoke to heads of payments from four international operators – Kindred Group, Entain and PaddyPower Betfair – to find out why open banking is an important part of their payments strategy this year and beyond.

1. “Instant payments are a driver for people to come back”

Recent research from YouGov (2020) found that 8 out of 10 players rate fast payments as important and almost two thirds of respondents are more likely to trust a gaming service that offers fast withdrawals and deposits (64%).

YouGov also found that more than half the players surveyed in Europe were likely to switch to a different iGaming brand if that brand offered them instant payouts. Plus, almost a third (28%) would consider depositing more if they could withdraw their winnings instantly.

While customers may experience ‘instant’ deposits with payment methods like cards (since they can typically use the funds as soon as the payment is executed), the funds don’t reach operators until a few days later. Open banking deposits settle instantly in the UK and many parts of Europe for both players and operators.  

Payouts to customers using cards are typically slow, taking up to five days. While open banking doesn’t currently cover payouts, it can be combined with faster payment bank rails across the UK and Europe to allow for instant payouts.

So, what do the operators say?

Jim Noakes, Head of Payments Innovation, Entain:

“Everyone expects an Amazon view of the world – if I click a button and can’t have it immediately, it’s too slow, that’s what we’re up against in terms of expectations...

While players have long been used to debit card payments and being able to use their funds straight away, finance directors don’t get the money until 2-3 few days later… open banking has a lot to offer there. Getting to a much faster flow in both directions can only benefit customers and companies."

Natalie Dunne, Head of Payments, PaddyPower Betfair:

“If you can pay in instantly, you should be able to get your funds out instantly. Other payment options like Visa Direct let you do this, but it’s only applicable to a small portion of customers. Wallets can be instant, but it’s not actually back to your bank account – if you want to use those funds elsewhere you have to initiate the process of getting it back to your bank account.

Open banking ‘plus’ through TrueLayer is a no brainer here: it’s money in and out straight away – without the poor UX and operational overheads of manual bank transfers.” 

Mickael Marceau, Head of Payments, Kindred Group:

“We try to automate the process of verifying winnings and paying out instantly – this is really key and it’s possible with bank payment rails like Faster Payments in the UK and SEPA Instant. Visa Direct has started to offer this but not all the issuing banks participate in the scheme. Instant payouts are really the key for instant gratification – getting the money back to your account, and enjoying your winnings then and there – that's what gaming is all about.” 

2. “The user journey will be much slicker”

Open banking payments were designed for digital, meaning players don’t need to remember their payment details, key them in or trust websites to store them. 

With 'app to app' open banking user flows, players can securely sign up, register or pay in a few taps, with their face ID or fingerprint. No more lengthy forms, and no need to ask customers to manually upload documents to verify account ownership and income. 

So, what do our operators think?

Jim Noakes:

“Bank payments already have their place in Europe, despite the technology. Open banking can only make things better. The market ought to be ripe for embracing open banking because the journey will be much slicker – and we’ve proved that if you make it easy for customers, they’ll do it.

With open banking, there will be consent notices, but people will get used to it. It’s incumbent on all of us to make the journey slick and foolproof, so customers don’t drop off and we don’t drive them to contact Customer Services. If we do that, this will snowball, I’m convinced of it.”

Natalie Dunne:

“For years I’ve been hoping that open banking would catch on – and we saw its potential in the UK, when Captain Tom raised £30m for the NHS using open banking payments. People who didn’t know about open banking before were suddenly saying: ‘wow, what is this?’ Millions of people used it, which was proof that open banking would work in the UK.”

3. “It’s tried and tested with SCA”

Strong Customer Authentication (SCA) is now in force for card payments in the UK and Europe. While this new regulation will make card payments safer and reduce fraud losses, the additional authentication steps required for online card payments will likely also negatively impact conversion, as Microsoft found.

Open banking payments were designed with SCA in mind. So what does this mean for our operators?

Natalie Dunne:

“We know what the experience is with open banking – it’s tried and tested, but we’re less sure about experience with cards now, post-SCA. Open banking is a no brainer. It ticks all the boxes – security and speed.”

Mickael Marceau:

“It’s the beginning of SCA, and so far we haven’t seen any big negative impact in card processing: the challenge is that some third party providers are not ready for it, so we have to play around with the volumes to make sure we are processing with the right partner.”

4. “Open banking supports the industry in its aspirations.”

With an influx of new players gambling online since the start of the global pandemic and regulators in the UK and Europe calling for tougher rules to protect at-risk and problem gamblers, operators are looking at how open banking can support them with safer gambling programmes. 

Open banking enables businesses to connect directly to a player’s bank account to fetch transaction data or initiate a payment, with the player’s consent. It can support operators with performing affordability checks, setting spending caps and putting in place payment blocks.  What do our operators think?

Jim Noakes:

“The absolute thing the regulators are honing in on is the ownership of payment instrument to the name of the player. It’s long been a bone of contention and disbelief that operators don’t know that the card name on a debit card actually belongs to the customer. 

The open banking process of verifying the player name with the name on the bank account is going to be a big help in that battle, and will lead on to addressing bigger things like source of funds and affordability. 

At the moment it’s very tricky to work out affordability for example – we ask players a set of questions about whether they can afford it and where their income is coming from. Players send us a set of disparate bank statements and our team has to make a decision on whether to let that customer keep playing or not...  Of course, incomes might say one thing, but you don’t have all the information, such as outgoings… 

Payments, verification, affordability – it’s a staircase, and open banking supports the industry in its aspirations here. “

Natalie Dunne:

“Open banking leads the way on safer gambling. It will help us with the different checks we have to perform around KYC and affordability for example. It’s not going to solve all the problems, but it’s a starting place to help us meet the requirements and expectations of regulators."

Mickael Marceau:

“In the UK and a few other countries we removed credit cards as a payment option a couple of years ago. It didn’t have a massive impact as we were already strict on betting on credit. But removing it completely allowed us to have a clean sheet, so players can only spend the money they have.

Now the challenge is: can you afford to spend the money you have on gambling? We have our internal systems to check affordability which are very well developed, however using open banking as an extra third party check or API call would definitely help us to become better here.”

The year of open banking

So, what impact do our operators think open banking will make in iGaming this year? 

Natalie Dunne comments: “2022 is going to be the year that open banking breaks ground. We have so many drivers to make this one of our key payment methods…  from a safer gambling perspective, an AML perspective, a regulatory perspective and because of the changing landscape in Europe.”