The open banking revolution

Despite increasing restrictions and complex regulatory requirements, the egaming market is expected to grow to $92.9bn by 2023. As markets in Europe continue to reach new levels of maturity, operators are facing a constant battle to stay compliant without degrading the player experience.

And with this exponential growth and complexity, existing KYC and payments methods are no longer fit for purpose.

Regulators are continuously re-evaluating their policies in an effort to keep the industry accountable, and global operators face different regulations in every market. Strict AML and KYC checks make it challenging for operators to stay profitable. On top of this, existing payments solutions don’t offer white labelling and can only payout to banks where they hold an account.

Rather than getting a streamlined payment experience under the operator’s brand, third-party providers are introduced which further fragments the player experience. These providers charge a premium, and often use screen scraping technology, which is notoriously unreliable and unsafe.

As a result of this, the player experience is falling short. Players are subject to lengthy registration processes and slow, complicated withdrawals, which negatively impacts the bottom line for operators.

Now more than ever

Player experience is more important than ever. The need to convert and retain loyal players is critical to long-term success.

Only platforms that deliver safe, personalised, and frictionless experiences will survive. By leveraging data science and technology to streamline processes and understand player behaviour, operators can create more effective acquisition and retention strategies. Responsible gaming is an essential aspect of this, as brand perception and trust are becoming key factors for most players.

Those who embrace new technology to stay ahead of the regulatory curve are set to succeed in the long-run. Open Banking and PSD2, complementary regulatory initiatives which came into force on 13 January 2018, open up access to financial data and direct-to-bank payments for operators. Consumers can choose to share their data with whichever authorised third-party provider.

By using open banking technology, operators can connect their app or website directly to a player’s bank account, access rich financial and identity data, and make direct payments to any account. There is no need for operators to rely on third party providers for KYC, AML, or payments processing. This eliminates friction for the customers and significantly reduces complexity and cost for operators.

There is a plethora of ways by which egaming operators can leverage open banking to transform their online offering. The acceleration of KYC and AML is one which will truly improve UX. Operators can connect their app or website directly to a player’s bank account using Open Banking, which means they can access account ownership data to use in the KYC process and analyse transaction history to weed out fraudsters. This is particularly useful in markets across Europe where regulation and age restrictions are different in each region.

Via open banking, operators can execute direct payments as a trusted holder of log in and transfer credentials that have been pre-authorised by the player and conversely, instantly payout winnings to any account that was used to fund a player’s gaming.

Elsewhere, by tapping into transaction data operators can track customer playing patterns which can be used to identify and segment VIPs and personalise the gaming experience.

In terms of responsible gambling, by accessing this same data, operators can analyse outgoings such as loan and rent payments to identify at risk players, and block gameplay or put spending caps in place.

The world is currently experiencing profound changes in consumer behaviour. People expect to transact seamlessly, securely, and digitally across all aspects of life and egaming is no exception. Open banking presents a myriad of opportunities for the egaming industry, and crucially, puts player experience and safety at the forefront.

Max Emilson is chief revenue officer of TrueLayer, a Europe-based provider of financial APIs. Prior to joining TrueLayer, he was CCO for SaaS company Wiraya after spending eight years working for Klarna where he helped grow the business from a local payment method in the Nordics to a well-known global brand.