Open banking: a new opportunity for customer experience

Customer experience doesn’t just stop at the services you provide. The entire lifecycle of a customer must be considered and payments play a key part in that. 

We partnered with YouGov to understand the influence payments have on the buying journey and found that 67% of payers will stop a purchase if their preferred payment method isn’t available. Respondents listed security, ease of use and money leaving their account in a timely manner as top things they look for when choosing a payment method. 

Open banking, with greater sharing of data and direct bank account access, could offer the greater speed, ease and security that your customers are looking for. 

In this article, we’re going to look at the key ways that open banking is set to transform the customer experience and why you should start now to make sure you don’t get left behind from customer expectations. 

Security

Fraudsters are primarily targeting cards as the weakest link. Over the last year, five times more money has been lost to unauthorised card fraud than the next payment method (UK Finance). 

Open banking is changing this. Open banking provides additional security features earlier on in the payment journey to stop criminals in their tracks.

How does open banking reduce fraud?

Open banking automatically redirects customers to their online banking, requiring them to verify upfront that they own the bank account they are using to pay. This makes it difficult for anyone to use stolen or fake bank details.

To authorise a payment through their online account, customers are often required to use Face ID or fingerprint verification. This type of authentication is very hard to copy or replicate, much harder than just using someone's card details online. 

With more visibility, there are less places for criminals to hide in the payments process. Open banking is fast becoming the strongest defence against fraud. 

Speed

In our research, customers identified that they prefer when payments are drawn directly from their accounts and in a timely manner. Open banking, in both one-off and recurring instances, settles up to 3x faster than cards and 3x faster than traditional Direct Debit. 

This can give customers greater visibility over their finances and a better understanding of where they stand financially. 

This is particularly significant for savings and investments customers when they’re making deposits into their savings accounts. Seeing funds land in their account within one working day puts the customers mind at ease and helps them to see their savings rising. 

Ease 

Preference plays a key part at checkout with 67% of customers reporting that they would stop an ecommerce purchase if they don’t see their preferred payment method available. However, there is another factor that can be even more of a barrier at checkout - complexity. 

We found that over two-thirds of respondents said they would stop and leave their purchase if the checkout process felt too complicated. 45% of respondents felt frustrated when manually entering payment details online. 

Clearly, taking any complexity out of the payment journey is crucial. With open banking, once you’ve sent the payment link, customers are directed to their online banking app to quickly authorise their payment. It means there’s no entering of long card details or complex payment journeys. 

Once the payment has been authorised, there’s very little chance of the payment failing or being charged back. Card payments, on the other hand, can fail up to 8% of the time. When a payment fails, you have to chase the payment creating more complexity for the customer. 

In a world of increased competition, where it’s harder than ever to attract and retain customers, open banking can complement your efforts to create the ultimate customer journey. 

We also know that 1 in 4 consumers prefer to pay for both one-off and recurring payments using their bank account. Adding open banking into you payments journey now will help to maximise the customer journey and beat the competition. 

The benefits don’t just stop at your customers. The speed, ease and security open banking provides is also great for businesses too. 

Find out more about the business benefits of open banking.