Open Banking in Crypto: Streamlining Payments and KYC

Unlock the potential of your crypto business with open banking. Dive into our insightful guide on enhancing transaction security, streamlining KYC, and boosting operational efficiency in the cryptocurrency industry.

Famed for being a volatile market which requires fast movements and high security, the crypto industry needs a solution that will make it secure, cost-effective, and streamlined. Open banking has proven to be an effective solution to generate increased conversions, a smoother user experience, and cut down on fees that can hinder business growth. With a coupling of payments and data initiation services, the blockchain industry can experience a compliant and smooth experience for businesses and their customers.

Let’s delve into how open banking is reshaping the cryptocurrency landscape.

Understanding the relationship between open banking and blockchain

An open banking API enables access to financial data and smoother payments, and blockchain, known for its decentralised and secure technology, are able to converge to create a more agile and transparent financial ecosystem. This is particularly impactful in the realm of cryptocurrencies, where the need for secure, efficient, and user-friendly financial transactions is paramount.

The power of account-to-account transfers

One of the most significant impacts of open banking in the crypto space is the facilitation of direct account-to-account transfers. Crypto companies can offer an enhanced payment journey for their customers, as well as Strong Customer Authentication (SCA) embedded for that additional layer of security.

This capability allows for the rapid and cost-effective movement of funds between bank accounts and open banking wallets. Your customers can now top-up their digital wallets directly from their bank accounts, bypassing traditional, more expensive payment methods. This not only improves the user experience and enables them to place their trade faster but also reduces the operational costs associated with digital asset transfers.

Discover how open banking enables simple and seamless wallet top-ups.

Enhanced crypto KYC with open banking

Financial crime compliance costs are on the rise for businesses, and the crypto industry is no exception. Regulators are needing satisfaction that compliance efforts are being increased by crypto companies to reduce risk and have a robust AML programme. The integration of open banking into cryptocurrency platforms transforms the KYC (Know Your Customer) process so you can onboard your customers quicker and with confidence.

By leveraging direct bank data access, crypto businesses can conduct soft KYC checks, verifying account holder names and IBANs with greater accuracy and less effort. Yapily Validate enables swift and streamlined real-time customer checks to validate someone’s identity, while keeping both parties protected against fraud.

This approach not only streamlines customer onboarding but also significantly cuts down on compliance costs, a crucial factor given the traditionally high expenses associated with KYC procedures in the crypto industry.

For crypto companies to integrate open banking into their financial operations, it presents ample opportunity to showcase efforts into ethics and AML best practices, while benefitting the business with reduced manual workload and reduced costs.

Eager to learn more about how open banking can cut down compliance costs and support large businesses with optimised KYC operations? Explore in more depth here.

Heightened security in crypto transactions

Security concerns are paramount in the crypto world, so adopting open banking contributes an additional layer of security to crypto transactions. By utilising established banking security protocols, such as two-factor authentication and robust encryption, open banking platforms ensure that the transfer of funds to and from crypto wallets is secure. With open banking, users can log in with their bank app so no card information is shared or stored.

Not only that, but with adherence to the relevant jurisdiction’s AML and KYC practices, exchanges have greater proof of the source of funds on their platform to show regulators. While not completely exempt from fraud, crypto exchanges and their users are vastly more secure with open banking.

These increased efforts into user security is crucial in building trust and reliability in digital asset transactions.

How your crypto business can use open banking

Yapily’s open banking payments platform acts as a catalyst for your business innovation. It offers a range of functionalities that can transform operations:

  • Instant payments: Utilising the Faster Payments scheme, open banking enables almost instantaneous transactions in the UK and parts of Europe, significantly reducing settlement times from days to seconds.
  • Revamped user experience: By automating the verification of customer identity and source of funds, open banking streamlines the user journey, reducing manual input errors and payment failures.
  • Operational efficiency: Open banking can significantly reduce the high operational and transaction costs typically associated with digital asset transfers.

By circumventing traditional payment processors that often block or charge high fees for crypto transactions, open banking offers a more cost-effective solution.

Next steps for crypto and open banking

The integration of open banking into the cryptocurrency sector marks a significant step towards a more interconnected and efficient financial ecosystem. By addressing key challenges such as transaction speed, security, user experience, and regulatory compliance, open banking is a complementary tool to give crypto companies a competitive edge.

For crypto businesses looking to harness these benefits, exploring open banking solutions is a strategic imperative. Start reaping the benefits today - simply speak to one of our open banking experts to get started.


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