Consumer awareness of open banking might be low, but looking into 2020, we can expect the U.K.’s merchants to drive the continued uptake of open banking payment methods.
The U.K. is at a tipping point when it comes to open banking. This much seems clear from the conversations we have with U.K. merchants every day, across a wide range of sectors.
According to our own research, a striking 97% of merchants said they will implement Open Banking initiatives within the next year. Of these, 56% expected to do so within six months. Many merchants are now turning to the opportunities that PSD2 offers, namely, the speed, security and cost-effectiveness of open banking payment methods.
Indeed, already the payment initiation service (PIS) is said to have grown at 70% per month for the last six months, according to OBIE research. The research goes on to cite that in August alone they grew by 141% to more than 450,000 transactions. While this figure is small in comparison to the total number of online payments, it demonstrates that Open Banking payments are now being used at scale in live environments.
The positive uptake of open banking functionality shows that merchants are realizing the opportunity for themselves and their customers. One of the key drivers of this is the ongoing improvements to the customer experience the technology offers. Eighty-seven percent of the merchants we surveyed indicated that customer experience is important to their organization, and UX has been a major focus of recent updates in open banking. Now, open banking transactions can be processed in as little as 20 seconds, with no data entry needed on your mobile device.
What we see here is that, rather than viewing open banking as a compliance exercise, U.K. merchants now see it as an opportunity to compete and innovate. We are also seeing a growing number of examples using open banking, including use cases in the face-to-face payment environment, like charity donations and money transfer businesses. From financial services to insurance, retail to the charity sector, organizations are increasingly interested in the speed, security and cost-effectiveness of this new way to pay.
