It is a trend that has come to stay. We talk about the bank payments through open banking or open banking that are increasingly important in our society. This payment method allows everything from buying a car, making investments and even making donations to charities. It is an alternative that more and more electronic commerce brands will use.
Although open bank payments (in the form of instant bank transfers) have found their niche in sectors such as wealth management, iGaming, credit, loans and digital banking, most of the e-commerce companies have not yet adopted this new payment option.
Relevant data at a global level reveals that, in 2022, the income opportunity created by open banking it will be more than eight billion euros, that 71% of SMEs expect to then use an open banking service and that 64% of adults plan to benefit from an open banking service for that year (according to PwC).
However, at a time when electronic commerce is booming in Spain, since the turnover throughout the national territory was 51.6 billion euros last year, according to data from CNMCData, there is a great possibility that companies in this industry embrace the possibility of open banking payments.
How is the sector in Spain?
“It is necessary a profound change in the client that passes through giving greater confidence to alternative models to traditional banking, and that confidence, in addition, must materialize in the transfer of data to third parties”, explains a Deloitte report on open banking in Spain.
The consultancy firm states that, when entrusting its savings to an alternative provider to the traditional one, the Spanish, according to a survey it carried out, they prefer the big banks (47%) and, to a lesser extent, to large distribution (37%), leaving little margin for other players such as fintech companies (10%) or telcos (19%). Therefore, the possibility of a greater transfer and of accelerating the growth of this model are wide.
In this regard, TrueLayer commissioned an independent research consultancy with extensive experience in payments, to better understand why open bank payments are particularly suitable for challenging card dominance.
Open banking payments have been growing for a few years, but that expansion has accelerated in the last year. For example, payments grew 485% in the UK between August 2020 and August 2021, reaching almost 2.4 million successful payment initiations in a single month. And Spain should follow that same path, taking into account that its legal framework is delimited by the European directive on digital payment services PSD2, which entered into force in Spain on November 24, 2018, just three years ago.
All this indicates that payments made through open banking will accelerate in Spain as its implementation by companies increases, now that Spanish banks have implemented app2app authentication as a result of the new regulation PSD2.
Previously, users who tried to make an open banking payment from their mobile phone were redirected to a microsite and had to log in by entering a username and password, before being asked to confirm the payment.
Now, with app2app, the consumer is automatically redirected to their online banking application, where they can log in biometrically with Face ID or fingerprint. This makes the entire payment process much more agile and user-friendly, with fewer steps and greater security.
TrueLayer is the only open banking provider that supports app2app processes for all Spanish banks today. The company, which launched its open banking platform in Spain in 2020, has been testing these processes for data and payments since February, and in recent months it has found that conversion rates have increased by 10% on average.
Open bank payments are starting to enter the full stage. They offer a strong alternative to the ubiquitous card networks. Also, as open banking users continue to grow, e-commerce companies have a limited window of opportunity to join the most innovative brands in shaping the future of open banking payments.
