We commissioned 11:FS to survey 999 UK businesses, combining the results with interviews of payments specialists to understand the steps needed for open banking payments to go mainstream. From early adopters to industry collaboration, here’s a look at the key findings from our report, “How to Take Open Banking Mainstream” and the factors that will contribute to open banking’s success.
Open banking awareness is growing
Open banking awareness is on the rise in the UK with nearly a quarter of people surveyed saying they are ‘very familiar’ with open banking.
Businesses report multiple benefits from using open banking
CUSTOMER PERSPECTIVE
“Open Banking actually addresses pretty much the entire list of challenges we had with card payments:
Card fraud → gone
Chargebacks → gone
Refunds or refund requests → dramatically reduced
Processing costs → slashed
Receiving money from acquirers → almost real time.”
Oliver Shaw-Latimer - Senior Director, Payments Innovation
JustGiving
Open banking: The adoption roadmap across different sectors
By evaluating the current adoption trends and which use cases are best aligned to the current and future benefits of open banking payments, we’re able to understand which sectors are due to adopt and the speed at which they’ll do so.
Businesses are looking for better ways to pay
Card fees (36%), waiting to get paid (26%) and conversion (16%) are among businesses’ biggest frustrations when it comes to processing payments. A wider rollout of Variable Recurring Payments, offering greater conversion, lower fees and faster payment timings, could bring businesses what they are looking for.
The six main barriers to adoption today
1
Open banking infrastructure is still immature and needs development
2
Consumer knowledge of open banking payments is still limited
3
Customer experience is inconsistent due to immature infrastructure
4
The commercial incentives aren’t felt by all parties in the chain, most notably for the banks
5
Variable Recurring Payments have not been adequately mandated or implemented
6
The regulatory-led approach has hit the limits of what can be achieved
Nine steps to drive widespread adoption in the UK
Payment providers have the biggest incentive to make open banking payments work. Instead of waiting for regulators to fix the market’s problems, payment providers and regulators need to work together in nine key areas.
Better consumer protections and greater commercial incentives will all help to drive greater awareness and adoption for consumers and merchants. A fully mandated rollout of Variable Recurring Payments will provide the greatest step towards open banking going mainstream, with the potential to challenge both Direct Debits and card-on-file payments.
