Open Banking has a branding problem

Open Banking has a branding problem, and I’m not talking about logos or websites. I’m talking about branding as a promise, or (as Michael Beirut, partner of design firm Pentagram, puts it) branding as ‘a world of associations that have accrued over time’. 

Four years after it was officially ‘born’, Open Banking is often associated with data first and payments second. And that’s a problem because payments are the most promising Open Banking opportunity.  

How did we get here? 

In 2018, legislation that enabled the start of Open Banking came into effect in the UK and Europe. Initially, APIs for data access were the most stable and available, so the first use cases to hit the headlines were data-driven: personal financial management (PFM) apps, and later, accessing bank account data to make onboarding, risk, and credit assessments smarter and more efficient. 

In mid-2020, APIs for payment initiation began fully stabilising in the UK, with Europe following suit in mid-2021. That’s when Open Banking payments’ growth trajectory took off — but by then, the initial association of Open Banking with data had already stuck. 

Starling CEO Anne Boden’s comments on the supposed failure of Open Banking illustrate this ‘branding’ problem well. Late in 2021, Boden pointed out to UK MPs that ‘Open Banking has not been a success’ because it hasn’t resulted in increased account switching.

Of course, account switching is an interesting use case. However, implying that ‘Open Banking = account switching’ is not only a ‘dramatic oversimplification’, but perfectly illustrates that in conversations on Open Banking, half of the picture is often missing (and, I would argue, it’s the more exciting half). 

Open Banking payments are taking off

According to the Open Banking Implementation Entity (OBIE), ‘the use of open banking payments is growing due to the progressive rollout of open banking payment acceptance by large companies and institutions’. And the numbers bear this out; Britons made over 26.6 million Open Banking payments in 2021, an increase of over 500% in 12 months. At Token, we now drive over 10 million annualised payments across the UK and Europe and project further explosive growth as adoption of key use cases accelerates (loading digital wallets, repaying credit card debt, and purchasing high-ticket items like cars, are to name but a few).

Impressively, Worldline now projects Open Banking payments will account for 10% of all global payments by 2026. Juniper has also noted an increasing appetite for Open Banking payments within ecommerce checkouts, predicting Open Banking payments will exceed USD 116 billion and become a key driver of global ecommerce growth in the next five years. 

A promise made must be a promise kept

Open Banking is fundamentally changing the payments landscape and promises to end the dominance of cards. I believe this will be a promise kept because there are so few trade-offs; Open Banking payments are simply better for everyone.

First, consider consumers, who want payments to be secure, invisible, and seamlessly woven into whatever services they’re using, wherever they are. Open Banking payments satisfy these demands with a better user experience than, for example, cards. Personally, I would always choose to ‘Pay by Bank’ and authenticate that payment biometrically in my banking app (the typical user journey in the UK) over typing in a 16-digit card number (and expiry, security code and billing address!)

Merchants would prefer that I ‘Pay by Bank’, too — and why shouldn’t they? Removing intermediaries makes open payments up to 20x cheaper than traditional payment methods. (In 2021 alone, we estimate that Token helped merchants save up to EUR 24 million.) In addition, they settle instantly, have higher success rates than cards, remove the need to store sensitive cardholder details, and eliminate the headaches of chargebacks. And I haven’t even scratched the surface of the benefits Variable Recurring Payments unlock for merchants or the gains that Open Banking enabled ‘Request to Pay’ can deliver for SMEs!

Finally, consider that Open Banking allows banks to go beyond data access to reclaim their position as the centre of the payments universe. Banks can act as the ‘acquirer’ for Open Banking payments, building value-added services on top to compete with fintechs. For example, banks can create new revenue streams while deepening customer relationships by re-bundling services traditionally associated with card payments (purchase protection, rewards programmes, BNPL) around open payments. To return to Boden’s point, this could actually increase loyalty and reduce consumers’ desire to switch accounts.

A shift is coming

If a brand is ‘a world of associations that have accrued over time’, then both industry bodies and technology providers like Token must continue to drive compelling and consistent associations between ‘Open Banking’ and ‘payments’.

Earlier this year, it was encouraging to see press around Open Banking’s fourth ‘birthday’ offer a more balanced and complete picture of what Open Banking is and why it has been a success. Amplifying hard figures, and sharing specific use case stories, will also add more colour to the missing half of the picture. But unfortunately, this is not without its challenges across the Channel in Europe.

Europe does not have an equivalent source for the type of aggregated data the OBIE provides on UK open payment adoption. Companies like Token can share their data on European take-up. Still, verifiable numbers are needed at the macro level to track, assess, and increase awareness of open payments growth in Europe. Letting the numbers speak for themselves would further strengthen the association between Open Banking and payments on a larger scale. 

About Jess Gerrow

Jess Gerrow is the Vice President of Marketing at Token, a leading Open Banking payments platform driving the shift from traditional payment methods to bank payments. At Token, Gerrow joins a leadership team of experts in payments with deep technology and Open Banking experience. Before joining Token, Jess ran a creative agency, leading marketing and brand strategies for UK, US, and EU startups, scale-ups, and household names in payments, tech, FMCG, retail, arts, and culture. A multidisciplinary marketing and communications professional, Jess is known for her pragmatic, cross-functional, and creative approach to driving brand narratives and growth momentum.

About Token

Token is an Open Banking platform that has pioneered innovation in payment initiation and data aggregation technology in Europe since 2016. Today, Token is driving the shift from traditional payment methods to account-to-account (A2A) bank payments. The best and brightest PSPs, banks, and merchants create new capabilities and revenue streams with Token’s complete Open Banking toolkit and broadest coverage for payment initiation and data access in Europe.