How can open banking enable safe online gambling for users and operators?

Making online gambling safer has been increasingly high on the UK government’s agenda as it sets out proposals to reform gambling laws. At the same time, the gambling regulator has also turned its attention to how gambling businesses follow rules when promoting gambling products and interacting with customers.

We take a look at how open banking can help create safer online gambling environments for players, while helping operators meet their regulatory obligations.

What is open banking?

Open banking is a way of giving regulated companies secure, limited access to a customer’s bank account with the customer’s express permission. This access is enabled by secure technology called application programming interfaces (APIs). APIs allow customers to:

1. Share account and transaction data, for example, to help with affordability assessments

2. Make payments and initiate payouts without the need to share card details

How does open banking make gambling safer?

Open banking helps gambling operators meet their safeguarding requirements in a more efficient and targeted way.

By connecting directly to a player's bank account in real-time through secure APIs, open banking can:

• Enable operators to verify a customer's identity and check that the payment account they are using belongs to them

• Provide a comprehensive view of a customer’s bank account to more accurately assess the eligibility of the customer

• Give customers the option to switch on gambling blocks for open banking payments

Verifying customer account ownership

All online betting and gambling platforms are required to verify account ownership of new customers, as well as whether those customers can afford to gamble and their source of income. This is intended to prevent unauthorised players and protect those who are vulnerable, while also helping to detect fraudulent account creation and activity.

Operators typically carry out these checks by asking customers to submit their account statements and/or identity documents manually or by email. But customers often end up waiting days or even weeks to be verified and may simply give up and go elsewhere.

Carrying out checks in this way is also risky: sending sensitive information on non-encrypted platforms such as email or by post can lead to data breaches or information being manipulated or forged. The problems don’t stop there — customers can make mistakes when manually inputting data, which sometimes means legitimate players are incorrectly rejected from platforms.

With open banking, operators can verify account ownership in an automated and accurate way. Open banking uses API-based account verification coupled with secure authorisation methods (such as biometric authentication), so operators can be sure that the payment account a customer is registering belongs to them — and this is verified directly with the bank. Since open banking pulls data directly from customers’ bank accounts, it also means fraudsters can’t upload false documents.

Open banking makes the whole verification process much easier and less labour-intensive as input fields are automated and pre-populated by the bank. Operators don’t need to manually cross-reference customers’ identity documentation with the bank’s records, which significantly speeds up the onboarding of legitimate, eligible players.

Providing a comprehensive view of a customer’s bank account

The UK Gambling Commission requires operators to take into account the regulator's guidance on customer interaction, demonstrating that they’re meeting three key outcomes:

1. Identifying people who may be experiencing, or at risk of developing, problems with gambling

2. Interacting with them to offer help or support

3. Evaluating the impact operators’ interactions have on customers

Imposing spending caps and blanket restrictions alone are not sufficient when trying to achieve these outcomes. The regulator has indicated that operators will need to look for "indicators of harm" and harmful behaviours that are specific to a customer.

It’s here that open banking can help safeguard vulnerable and at-risk players. By providing accurate, real-time data, open banking can highlight abnormal spending behaviours. This calls attention to problem gambling at an earlier stage, helping operators to intervene and protect players.

At TrueLayer, we are working with operators to help them build affordability solutions alongside the payment and data products they use. We are developing an affordability product to meet the requirements of a range of providers and risk appetites. Our ambition is to give operators a tool that can help them implement some of these regulatory requirements.

Offering customers the option to switch on gambling blocks

As well as helping operators with their customer verification checks, TrueLayer is pioneering the approach to safer gambling with open banking technology. In February 2021, TrueLayer launched the gambling block in partnership with Monzo, which enables customers to stop open banking payment transactions to gambling operators.

Customers can apply the gambling block to their account themselves in the app or by speaking to the bank. To remove the block, the customer needs to ask their bank and wait 48 hours.

TrueLayer will automatically let the bank know, via an enhanced API call, when their customer attempts an open banking payment to a gambling firm. This additional data access enables Monzo to prevent the payment on the customer’s behalf if they have activated a gambling block.

Every consumer should have access to a gambling block, regardless of who they bank with or how they pay. This is relatively simple for banks and open banking providers to put in place, and can have a significant impact on a player’s wellbeing.

Open banking can make online gambling and betting safer in the long-run

The gambling industry is awaiting the release of a gambling white paper and further announcements from the Gambling Commission. The use of customer data to carry out more accurate and efficient affordability checks and identify at-risk players earlier will be central to making online gambling safer and more sustainable.

Open banking offers the technology that operators need to meet their obligations towards customers in a more secure, efficient and seamless way.

Find out more about open banking with our open banking guide. If you’re already familiar with open banking and are looking for the ideal provider, check out our open banking buyer’s guide to find out how to choose the right provider for your iGaming business.