More than a fourth of UK businesses consider adopting Open Banking for enhanced safety measures.
In the world of finance, Open Banking holds great promise, offering benefits such as faster transaction times, streamlined customer payment experiences, and improved security. However, its widespread adoption by businesses has been slow, with several key challenges hindering progress.
More than half of businesses say slow refund processes have worsened customer experience or cost them sales. This issue is where solutions like Payit come in. Payit allows businesses to optimize cash flow and make informed decisions using real-time insights and transaction tracking. Salad Money makes Payit by NatWest available via an online portal, delivering seamless, secure, and rewarding experiences for customers.
One of the main obstacles to Open Banking adoption is the high costs and security burdens on banks to support APIs and data sharing. These costs lead some large banks to impose fees on third-party access, creating barriers for fintechs and smaller players. Lee McNabb, head of group payments strategy at NatWest, emphasizes the need for efficient and secure payment methods like Open Banking.
Besides technical costs, banks deal with lengthy IT development cycles, regulatory compliance hurdles, and internal decision-making processes that delay feature rollouts. This slow pace, combined with a lack of customer-centric culture and organizational resistance to transformational change, hinders innovation and adoption.
The fragmented regulatory landscape across countries creates uncertainty for providers and customers, complicating broader adoption and harmonization. Large established institutions also tend to resist open banking because it threatens their traditional business models and power dynamics in the financial sector.
Despite these challenges, consumer interest in Open Banking is growing. Forty-six percent express willingness to use open banking, although actual usage remains low (about 11%). This reflects the underlying systemic and industry challenges rather than purely consumer reluctance.
However, confidence in established banks to provide secure Open Banking solutions is high, with ninety percent of businesses expressing trust. Seventy-six percent of businesses also trust fintech alternatives for providing secure Open Banking solutions.
The potential of Open Banking is not limited to payments. Its potential is seen to scale across the consumer journey, redefining payments and responsible lending, boosting inclusion, and unlocking real-life benefits for businesses and individuals. Payit by NatWest offers businesses a wider choice of payment options, promoting user satisfaction.
Salad's implementation of Payit transforms financial services for consumers, enabling simple, secure bank transfers without the need for 16-digit card numbers. This removal of friction and the flexibility and security it provides give customers the empowerment they've asked for, delivering fairer, faster, and more empowering ways to manage their money.
As more businesses like Salad embrace Open Banking, it's clear that the benefits could outweigh the challenges. Forty-two percent of British businesses are interested in integrating Open Banking into their operations, and the future of finance looks increasingly open.
Two-thirds of businesses have experienced issues when processing payments that disrupt their operations. Over half of businesses find the checkout journey for customers to be inefficient or overly complicated. Solutions like Payit offer a way forward, not just for businesses, but for consumers too.
[1] Source: Open Banking Implementation Entity (OBIE) [2] Source: PwC Global Open Banking Report 2020 [3] Source: European Central Bank (ECB) Report on Open Banking, 2020
- The slow adoption of Open Banking by businesses is partly due to the challenges arising from its implementation, including high costs, security concerns, and lengthy IT development cycles.
- With Open Banking, businesses can optimize cash flow and gain real-time insights using services like Payit, allowing for streamlined customer payment experiences and improved security.
- Despite consumer willingness to use Open Banking (46%), actual usage remains low (11%), which might be influenced by systemic and industry challenges rather than pure consumer reluctance.
- Banks are traditionally resistant to open banking due to threats to their business models and the complications brought by a fragmented regulatory landscape across countries.
- Solutions like Payit aim to provide businesses a wider choice of payment options, reducing friction, and enhancing security, fostering user satisfaction and empowering customers to manage their money better.
- Over half of businesses find checkout processes for customers to be inefficient or overly complicated, but solutions like Payit offer a way to simplify and secure these processes, benefiting both businesses and customers.
- Data from sources such as the Open Banking Implementation Entity, PwC Global Open Banking Report 2020, and the European Central Bank's Report on Open Banking in 2020 highlight these issues and the potential of Open Banking to redefine payments, responsible lending, boost inclusion, and unlock benefits for businesses and individuals alike.
