Your guide to open banking in 2022
The global adoption rate of open banking is on the rise, but the UK is still leading the way. In 2022, the UK is set to expand the use of peer to peer access and control of banking through third party applications.
With COVID making online payments an essential part of running a business, the collaborative model of open banking sharing consumer data via an API makes the payment process quicker and more direct.
Open banking is set to continue to disrupt the existing payment systems whereby banks are the main source of payment networks and offer a new way to pay and receive funds.
This can come with a whole host of benefits for both the vendor and customer. We’re taking a look at what could happen in open banking in 2022, so you can keep your finger on the pulse.
What’s coming up for open banking in 2022?
The main trend that we’re expecting in 2022 is an increase in open banking being used. Open banking allows banks and finance providers to deliver solutions using authenticated customer data.
By allowing instant payments in a safe way, open banking delivers a better service to the consumer. With real-time payments, both vendors and customers benefit from improved cash flow and instant payments.
We’re also expecting to see FinTech companies incorporating open banking standards into their products, and perhaps a shift in how businesses are approaching open banking.
As a result of PSD2 legislation, providers of payment services are forced to improve customer authentication and tighten third party involvement. Open banking is mandatory in Europe as a result of these regulations, therefore banks and payment providers are rushing to embrace open banking before they are forced to do so.
This will likely mean a quick uptake of open banking, where APIs will sit at the heart of financial services. This change will see the customer experience improved, thanks to faster and more precise payments.
Yoello’s Open Banking Offering
In 2022, Yoello will be launching our open banking function. Yoello is FCA Authorised for open banking, meaning that we can authorise and authenticate payment on behalf of a bank. This saves our clients and their customers both time and money, and means that they can put their best foot forward as industries reopen after the recent coronavirus setback.
By utilising APIs, our clients will be able to access technology outside of their organisation to process payments in a speedier and safer manner. We’re harnessing the open banking legislation (PSD2) to cut out the middlemen.
Our open banking offering - Yoello Pay - will be a central payment platform which utilises open banking to make transactions more affordable and bring merchants and customers closer together.
Benefits for businesses
Open banking will have many benefits for businesses. These include:
- Instantaneous payments
The main way that open banking will benefit businesses is by making payments instantaneous. This means there will no longer be a delay in taking payment, the transfer of funds will happen instantly. This is great for cash flow for both the consumer and the business.
- Reduced payment Costs
Banks have always had to initiate payments on the card holders behalf, however with new APIs this will now be quicker and easier. One of the main incentives of open banking is that the payment costs are lower for merchants. This is because the new updates will make it easier and cheaper for third parties, and that cost saving will be passed on.
- Better use of data
With open banking, building an accurate data profile of a consumer is made a lot easier. This means that you will be able to accurately predict how your customer might behave, which may inform business decisions. This is ideal for both parties, as the business can tailor a customer’s experience to their likes and dislikes.
Interested to learn what open banking could do for your business? Speak to one of our specialists today to learn more about open banking in 2022.