Voice of the Industry

Why Open Banking payments are more important now than ever before

Wednesday 22 March 2023 08:18 CET | Editor: Vlad Macovei | Voice of the industry

Charlotte Wise from American Express discusses how Open Banking is changing finance amid the cost of living crisis and its potential for innovation.


Charlotte Wise from Amex discusses how Open Banking is changing finance amid the cost of living crisis and its potential for innovation.


How can Open Banking payments help consumers manage their finances during the cost of living crisis?

Amidst high inflation and an increased cost of living, consumers are paying closer attention to every penny they spend. Our recent research found 77% of UK bill payers say it’s more important for them to stay on top of their finances now, whilst a further 73% value greater visibility and control over their monthly spending (PwBt research amongst 2,000 UK bill payers, conducted in October 2022).

Open Banking is a force for good – by giving consumers increased visibility, transparency, and control over their finances and data. For example, when using American Express’ Pay with Bank transfer to make a payment, the consumer is directed to their banking app. Here, they can immediately see their financial position, giving them the knowledge to make informed purchase decisions. Once their payment is approved, the money leaves their bank account instantly, meaning there are no pending transactions and customers have access to their true real-time balance.


Do the benefits of Open Banking payments extend to businesses too?

Merchants are also facing rising costs and a challenging macroeconomic environment, with customer retention and securing sales continuing to be the key focus for them. In the current climate, merchants cannot afford to risk losing customers to a poor checkout experience. Our research found that 78% of consumers don’t complete a purchase if they’re asked to enter additional information at checkout (Amex YouGov Research January 2021).

Implementing Open Banking-enabled payment options like Pay with Bank transfer that are convenient, secure and frictionless, offers customers a better experience, in turn, minimising cart abandonment for online retailers.

The benefits aren’t exclusive to just online businesses – brick-and-mortar stores can benefit too. Pay with Bank transfer streamlines payments in physical stores by allowing customers to use QR codes and payment links on their mobile devices.

Open Banking payments typically reduce fees, and they allow for more streamlined reconciliation, thus saving them time by removing the need to manually check and chase for payments. This also enables them to receive payments more quickly, helping cash flow management. 

Merchants often face increased scrutiny when faced with a challenging operating environment and it can feel difficult to strive for innovation during times like this. Through Open Banking payments, merchants not only benefit from significant cost savings but can offer their customers a secure and seamless experience which minimises basket abandonment, builds loyalty, and keeps customers coming back.


Is there anything holding Open Banking payments back?

There are clear opportunities to ensure Open Banking continues on the strong trajectory it has started on, now boasting 7 million active users and 68 million Open Banking payments made in 2022, a 170% year-over-year growth

The first is continuing the collaboration within the ecosystem to ensure it’s set up for future success, which represents many voices; regulators, third-party providers, banks and merchants alike. Working together to ensure a path forward for Open Banking in the UK will be critical to its long-term success – and we’re in the right place to achieve this, given the UK market is at the forefront of Open Banking payments innovation.

Another area of opportunity and a critical factor for the success of Open Banking payments that we’re leaning into is customer education. Our research found 64% of consumers have used an Open Banking product without even realising. 

At American Express, we’re focused on customer success and making sure that we’re backing our clients every step of the way to ensure their customers are educated on the benefits of using Pay with Bank transfer as their payment method. As part of this, we’ve organised focus groups to better understand how customers interact with the product and participated in many industry specific events to better educate merchants across a variety of sectors, including travel, retail and utilities, on how they can best support their customers’ payment experience. In addition, we work with our merchants to support them on improving their checkout experience for customers, resulting in a considerable shift from Card payments to Open Banking. 


Will the current economic environment prompt more innovation in Open Banking payments?

It’s well recognised that economic challenges can inspire ground-breaking new products and technologies, or indeed improve the adoption of existing ones. For example, the number of people sharing their data via Open Banking was found to have tripled between the start of the COVID-19 pandemic and May 2021, a shift which was attributed to an increasing number of consumers turning to digital banking methods while branches remained closed, and use of cash was limited.

The current economic environment provides further opportunities for Open Banking-enabled payments to help both businesses and end users. Merchants have a real opportunity to look for ways to invest in innovation and stay ahead of the curve. Although it might feel daunting, working with a trusted partner with experience in leading clients through challenging times, can help merchants to grab opportunities and come out on top in the long run.

So, to go back to the first question: why are Open Banking payments more important now than ever before? In a nutshell, both merchants and consumers are facing a challenging macroeconomic environment. But, equipped with the power of Open Banking, merchants willing to take a step towards innovation will greatly benefit long-term allowing their customers to benefit from a safe, speedy and secure payment experience. 

About Charlotte Wise 

Charlotte leads Business Development for American Express’ International Open Banking Payments business – Pay with Bank transfer. She plays a pivotal role in defining the strategy for scaled adoption of Open Banking in the UK and international expansion in up-and-coming markets.


About American Express

American Express is a globally integrated payments company that provides customers with access to products, insights, and experiences that enrich lives and build business success.

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Keywords: Open Banking, Open Banking payments, merchants
Categories: Banking & Fintech
Companies: American Express
Countries: United Kingdom, World
This article is part of category

Banking & Fintech

American Express

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