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3 ways to harness open banking for savings and investments

Emily Downer
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Last editedNov 20233 min read

Open banking is making it easier, faster and smarter for people to save and invest their money. Research from Open Banking Limited found that 64% of consumers found open banking savings apps increased their total level of savings and helped them to develop a regular savings habit.

And benefits don’t just stop at the customer experience. The speed of settlement that Variable Recurring Payments (VRP) offer, along with the increased security means that you can improve cash flow and overall reduce the cost and management involved in collecting payments.

It’s an exciting evolution in the world of payments that’s set to truly disrupt the savings and investment space.

In this article, we’re going to look at 3 key ways that you can use open banking to benefit your customer and, ultimately, your business.

1. Maximise cash flow and visibility

Direct Debit has long been the optimum payment option for savings and investment firms. Payments move directly from the customer’s account to the savings account they hold with you. Payments are scheduled and automated, giving you a clear overview of cash flow and forecasting.

Variable Recurring Payments are set to make payment collection even easier by enabling instant one-off and recurring payments. VRPs will be able to provide the reliability of Direct Debit payments but at a much faster rate.

Confirmation of payment will be within seconds and settlement will be up to 7x faster than cards and 3x faster than bank debit (GoCardless data).

What’s more, VRPs will also allow customers to make one-off contributions instantly through the same payment set up. A process that is usually supplemented by cards can be done through the same mechanism and will be settled up to 7x faster.

“We’re looking forward to the next evolution of payments in the form of VRPs that will make regular payments instantaneous too. This additional flexibility will be a game-changer for our customers and we’re delighted it’s not long before that vision becomes a reality.”

Crawford Taylor, CEO and Founder, Nude.

2. Put the customer first

Variable Recurring Payments (VRP) will help savings and investment businesses offer customers a faster and more flexible way to contribute to their savings.

Instant settlement of savings contributions will help customers get a clearer picture of where they stand and quickly demonstrate the impact they’re having on their savings. This makes the entire journey much more slick for your customers. They instantly see contributions landing in their account instead of waiting a day or two for them to appear and feeling unsettled during that time.

It will also enable you to offer a lot of payment flexibility. VRPs will enable customer to make instant one-off and recurring contributions and vary the recurring amount according to their financial situation, all helping them to reach their goals faster and in a way that works for them.

“VRPs will allow us to both process payments instantly and vary the amount customers invest in line with their financial situation at any given moment – all part of continuing to be a responsive wealth creation partner for them.”

Elise Nunn, Head of Operations, Plum.

3. Protect your margins

When dealing with tighter margins, cutting costs and reducing any inefficiencies in your payment collection process is crucial.

So how can open banking-powered payments help you to save costs?

Reduce fraud risk - 1 month of every year and 3.34% of revenue is spent covering fraud. With VRPs, payments are authorised through your customer’s bank account before you take the first payment, therefore you’re less exposed to fraud.

Get paid faster - VRPs offer faster settlement than bank transfers, Direct Debit and cards so you can improve your cash flow

Reduce the use of card payments - with instant settlement and payment flexibility, VRP offers a strong alternative to cards that Direct Debit hasn’t been able to offer so far.

“Customers depend on the ability to move money frequently and seamlessly from their bank account to Plum, so any failures jar sharply with that experience.

“GoCardless account-to-account payments are more cost-effective and reliable than cards, which are expensive to process and prone to fail when cards expire or get cancelled.”

Elise Nunn, Head of Operations, Plum

Save more with one provider

You can save even further by taking care of all your payments through one provider. GoCardless provides a wealth of bank payment products all through one integration.

Collect instant one-off and recurring payments with VRPs or through automated Direct Debit. Automate payment retries using machine learning based on data from millions of payments to retry failed payments on the optimum day and time for successful recollection.

Businesses already working with GoCardless have seen a 56% reduction in the overall cost of collecting payments and 59% reduction in payment admin.

Over 85,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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Interested in automating the way you get paid? GoCardless can help
Interested in automating the way you get paid? GoCardless can help

Interested in automating the way you get paid? GoCardless can help

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