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How telecoms use open banking

Antonis Kazoulis
Written by

Last editedMay 20232 min read

By combining transactional data with credit agency data, open banking allows telcos to get a complete picture of a customer's financial situation. This helps them perform better creditworthiness checks. Telcos can also provide customised bundles thanks to more detailed consumer profiles with up-to-date information on customers' spending patterns. 

Improved and even automated affordability checking is made possible by open banking's more precise calculations. By gaining an accurate picture of their customers and using real-time income and expense verification, telcos can prevent financial exclusion and debt for their customers before making loans.

Open banking benefits for the telecom sector

Faster customer onboarding 

One of the most popular methods for paying your phone or utility bills monthly is through direct debit. Before setting up a direct debit, many companies request that customers confirm the information associated with their accounts. Traditionally, this would entail making a micro-deposit or providing a bank statement, which would lengthen the process and require additional steps.

This perfectly illustrates how open banking can streamline the user experience and lessen needless friction. Customers can automatically pre-populate and instantly verify account information, making it possible to set up direct debits with just a few clicks. This significantly shortens the process of onboarding new customers.

Detailed background checks 

Open banking gives telcos and energy providers access to real-time transaction and balance data, enabling them to learn important details about their customers' financial situations. Businesses that can shield their most vulnerable customers from dishonour or overdraft fees will likely benefit from long-term customer loyalty in these uncertain economic times when affordability is a growing concern. 

Companies can analyse customer income patterns, determine whether a customer can afford a service, and predict their ability to pay their bills on time. Additionally, by checking customer balances, businesses can decide when to collect a direct debit payment, lowering the chance that the customer will be unnecessarily charged. 

Effective payments

No one enjoys paying their bills, making it even more important for telco and utility providers to simplify the process. Traditional bill-paying methods like direct debit and handwritten bank transfers demand manual labour. They may cause the customer a lot of friction, resulting in increased drop-off, even missed payments and an overall bad and bumpy experience. 

Due to the requirement to store sensitive customer data, these payment methods increase the operational workload for businesses and raise fraud and compliance issues. Additionally, the funds may take up to 5 days to settle, increasing the risk to cash flow. 

Open banking offers a more straightforward, more affordable, and more secure method to accept payments directly from consumer bank accounts. Customers can use the option to pay their bills or invoices with a few clicks instantly, pay multiple bills at once using bulk payments, or top up their accounts to settle an unpaid balance.

Better analytics and insights

Open banking can also provide telecom companies with valuable insights and analytics on customer behaviour and spending patterns. By leveraging customer data from third-party providers, telecoms can better understand their customer’s preferences, interests, and needs. This can help them develop targeted marketing campaigns, improve product offerings, and enhance customer retention strategies.

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