As expected, 2021 is meant to bring us closer to the normal that we know and have missed throughout last year. It also promises to bring increased levels of innovation in the financial services sector, supported by the further development of Open Banking. Use cases are becoming more evident and the benefits of innovation are now clear in a time where accessibility and control are of paramount importance to businesses and consumers. Here is what we expect you will see more of this year:
Further use of account information to develop broader product offerings
Financial products and services are already changing dramatically thanks to the information and payment infrastructure unlocked by Open Banking. However, 2021 is set to bring further change to the market through increased adoption and innovation. Expect there to be a broader range of products and services on offer for those who are willing to consent to third parties accessing their financial data for lending and other financial services, or for those looking to pay by bank.
Lending and credit worthiness assessments will dramatically change, whereby consumers' financial data will unlock hyper-personalised lending options and provide lenders with more confidence to lend - in a time where lending may be relied upon for the well needed boost in the economy. Loans that are tailored to an individual or business based on their actual financial profile, will mean a higher variation in interest rates and levels of credit. Find out more about how Open Banking unlocks financial data for lending.
As Open Banking develops further towards Open Finance - increased availability of credit card, savings and mortgage data would enable lenders to make more accurate credit worthiness assessments. This data could also be utilised by PFM applications using account aggregation, giving businesses and consumers full visibility of their financial products and services.
Increased adoption of Open Banking payment solutions
Open Banking payments are already providing a well needed solution to the unnecessary fees charged and user experience challenges that card payments cause. You can read more on fraud and UX challenges with card payments here.
Businesses such as investment platforms are currently enabling consumers to use Open Banking to top up their online wallets/accounts. Yapily partner Moneyfarm, have already seen great success with this - after just three weeks 1 in 5 transactions were being processed through Open Banking.
Ecommerce businesses are going to see the largest benefit in 2021, in the form of enhanced checkout processes and reverse payments. Open Banking powered payments are currently underused by the market, considering the increasing number of customers that rely on digital payments. Reducing transaction fees and improving customer experience will be key in the transformation and adoption of Open Banking payments for the ecommerce industry. In addition to checkouts, refund processes will be revolutionised by reverse payments. Putting businesses in the driving seat, so that the customer does not have to wait days (sometimes weeks) for their refund. Read more about the benefits of Open Banking payments for ecommerce businesses.
But these successes are not the only opportunities available when using Open Banking. Bulk payments are already here, helping many businesses process payroll and payment runs via their accountancy platform. VRP (variable recurring payments) are also very close to being introduced and will unlock a variety of ways in which businesses can utilise the benefits of Open Banking payments to rival direct debits and more. 2021 is a very exciting year and with the examples of success from last year, we expect to see increased adoption and further innovation.