Open Banking Expo 2024: Key Takeaways

October 2024

Banking

Matthew Purnell

Senior Research Analyst

Juniper Research attended the Open Banking Expo UK & Europe 2024, which was an opportunity for those involved with and developing the Open Banking space to come together, share market insights, and demonstrate their solutions. The event was held in London between the 14th-15th October. Major announcements were made, including Token.io and Santander partnering, enabling Santander customers to make A2A (Account-to-Account) payments for credit card repayments. Additionally, Neonomics announced the launch of Nello, a suite of AI-based payments and data solutions.

Many panels were held evaluating the Open Banking market; notably, many discussed payments and how the UK could facilitate A2A adoption and what needed to be done to ensure fairness in the Open Banking ecosystem. In this blog, we will explore some of the biggest themes and ideas we identified.

User Experience is Paramount for A2A Growth

A recurring talking point across several panels at the Expo was the role of User Experience in fostering A2A adoption. A2A payments have many benefits for businesses, like cheaper transaction fees compared to credit cards, but consumer benefits are limited. Therefore, creating solutions that consumers will want to return to, even if these changes do not directly benefit the provider is important. For instance, neobank Monzo has Quality of Life features that, whilst small, benefit consumers and warrant continued use. For instance, it offers split bill functionality, a mortgage tracker, and offers greater incentives to consumers to try different offerings, including Monzo’s A2A solution.

It was acknowledged by several panels and individuals that user experiences are pivotal for consumer adoption of A2A. Due to fraud concerns being a significant element of authorised push payments, it cannot be expected for consumers to shift from secure, well-trusted payment methods like credit cards without the benefits outweighing the fraud risks. This is why Open Banking payment providers must offer benefits that mirror offerings from credit cards, like cashback, or provide Open Banking exclusive solutions, like Variable Recurring Payments.

Big Tech and Open Banking

The importance of suitable regulations was a major theme at the Expo, with varying developments globally allowing for stakeholders to observe what works and what needs improvement. 
The influence of big tech companies was an element relating to regulations brought up during the Expo. The FIDA (Financial Data Access) Regulation legislation surrounding the sharing of financial data across Europe, currently has restrictions in place for six of the biggest technology companies, i.e. gatekeepers. These gatekeepers (Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft) are not able to utilise financial information and combine it with their in-house data due to their overwhelming presence within the market, facilitating fairness for smaller companies to flourish. However, there are still major tech companies who are able to utilise financial data in such a way, including Tesla, for things like financial agreements. Ensuring that restrictions on how major companies who are not considered gatekeepers utilise financial data through Open Banking was discussed in order to prevent further disparity between big companies and smaller businesses. This was a perspective shared by many in attendance, given the ultimate goal of Open Banking is a more inclusive market for all involved, and thus limitations on those already flourishing is appropriate.

That stance might be contentious, especially given the UK’s Financial Conduct Authority’s chief executive advocated for the presence of big tech firms utilising Open Banking data, with the idea that doing so could unlock better products and increase competition, promoting a healthier market. However, this stance seems ignorant to the fact that significant change in terms of market competitiveness comes from businesses of all sizes, which is only fair when the market is adequately balanced. Whilst the UK is market driven in terms of its financial related markets, there is a reason why, despite pioneering Open Banking, development has stagnated in recent years. Therefore, it seems that increased regulation in terms of who utilises financial data and how it is used would be beneficial in creating a healthier, more competitive market for all. This applies not only to the European market, but also the UK’s market. For the UK specifically, implementing regulations akin to FIDA is essential, especially for ensuring consistency across the wider European region, but also making sure that regulations mirroring DORA (Digital Operational Resilience Act) are enforced in order to maintain resilience in the UK’s financial sector.

Branding: A Must for the UK

A2A payments are confusing, with a lack of consistency with what they are called. In the UK A2A payments are likely most recognised as Pay by Bank, with some variation on that from some vendors (such as Pay by Vyne). However, there is a lack of cohesion for  the payment method. This presents a significant issue; not only are A2A payments already a relative niche in the UK market compared to established payments like credit and debit cards which are recognisable, but the issue of branding with A2A payments does not help encourage adoption.

Comparisons were made at the Expo between the UK and established Open Banking payment markets, like Brazil, India, Sweden, etc. Interestingly, Brazil’s Pix has become so culturally ingrained and popular that “Pix” has become a verb for making a payment the same way “Google” has become one for searching the internet. Whilst Pix became so popular in Brazil due to having a different starting point in terms of digital payments in the market compared to digital economies like the UK, that does not mean that the UK is immune to such change in how payments are made, and for cultural adoption of a payment method to occur. The most successful A2A markets, such as the aforementioned markets, have branding for their solutions since at some point they are top-down driven by national or leading banks, rather than market driven. This is an approach the UK would likely have to adopt if it wants a similar level of success for Open Banking Payments. Even if it is market driven, having consistent branding that is immediately identifiable for A2A payments is paramount for further adoption.

Ultimately, there is a lot of work needed for Open Banking to continue developing in the UK and Europe. However, the announcements, discussions, and attendance at Open Banking Expo signify that momentum will pick up in the foreseeable future.