How open banking is revolutionising online gambling

Despite increasing restrictions and complex regulatory requirements, the igaming market is expected to grow to $92.9 billion by 2023. As markets in Europe continue to reach new levels of maturity, operators are facing a constant battle to stay compliant without degrading the player experience.

Regulators are continuously re-evaluating their policies in an effort to keep the industry accountable, and global operators face different regulations in every market. Strict AML and KYC checks make it challenging for operators to stay profitable. On top of this, existing payments solutions, like Trustly and Sofort, don’t offer white labelling, and can only payout to banks where they hold an account. Rather than getting a streamlined payments experience under the operators brand, third party providers are introduced which further fragments the player experience. These providers charge a premium and often use screen scraping technology, which is notoriously unreliable and unsafe.

As a result of this, the player experience is falling short; players are subject to lengthy registration processes and slow, complicated withdrawals, which negatively impacts the bottom line for operators.

Player experience is more important than ever. The need to convert and retain loyal players is critical to long-term success.

Only platforms that deliver safe, personalised and frictionless experiences will survive. By leveraging data science and technology to streamline processes and understand player behaviour, operators can create more effective acquisition and retention strategies. Responsible gaming is an essential aspect of this, as brand perception and trust are becoming key factors for most players.

Those who embrace new technology to stay ahead of the regulatory curve are set to succeed in the long-run. Open banking and PSD2, complementary regulatory initiatives which came into force on 13 January 2018, open up access to financial data and direct-to-bank payments for operators. Consumers can choose to share their data with whichever authorised third-party provider.

This means that using open banking technology, operators can connect their app or website directly to a player’s bank account, access rich financial and identity data, and make direct payments to any account. There is no need for operators to rely on third-party providers for KYC, AML, or payments processing. This eliminates friction for the customers and significantly reduces complexity and cost for operators.

Neobanks and other fintechs are already using open banking to link to their customers’ external accounts, streamline onboarding, offer personalised financial advice, approve loan applications, set budgeting controls, and more. iGaming operators can and should leverage the same technology.

Below are five ways that iGaming operators can leverage open banking to transform their online offering.

1. Accelerate KYC and AML, fight fraud and stay compliant

   Operators can connect their app or website directly to a player’s bank account using open banking, which means they can access account ownership data to use in the KYC process and analyse transaction history to weed out fraudsters. This is particularly useful in markets across Europe where regulation and age restrictions are different in each region.

2. Seamless, secure account top-up

   When making an online payment, the user is no longer redirected to an e-payment interface, such as a credit card payment gateway. Instead, thanks to payment initiation services, when the player wants to fund their account, operators can execute direct payments as a trusted holder of login and transfer credentials that have been pre-authorised by the player. Because players authenticate directly with their bank, the entire transaction is highly secure.

3. Segmentation and personalisation

   Using categorised transaction data, operators can see which iGaming companies player’s use, how often they play, and how much they spend. This can help operators to identify and segment VIPs and personalise the gaming experience.

4. Responsible gaming

   Understanding gaming spend in the context of a player’s broader financial situation gives a better view of potential vulnerability. Using open banking, operators can analyse outgoings such as loan and rent payments to identify at-risk players, and block gameplay or put spending caps in place.

5. Instant payouts to any account

   When a player wants to withdraw winnings, the operator can instantly payout to any account using the same method that was used to fund the account, giving players a seamless experience and meeting AML requirements at the same time.

The world is currently experiencing profound changes in consumer behaviour. People expect to transact seamlessly, securely, and digitally across all aspects of life, from ordering food to travel and communication. iGaming is no exception. Open banking presents a myriad of opportunities for the iGaming industry, and crucially, puts player experience and safety at the forefront.

Find out more about how TrueLayer supports igaming operators.