December open banking insights

As 2021 came to an end, our open banking news feed was dominated by the proposed reform to the 90-day rule and Amazon’s announcement that it will not accept payments from Visa’s UK credit card customers.


Open banking users no longer need to reauthenticate

At the end of November, the open banking eco-system was discussing the Financial Conduct Authority’s proposed reform to the requirement that users must reauthenticate every 90 days. These modifications will increase open banking adoption throughout the UK, reducing the friction of users needing to re-apply permissions. TPPs will be responsible for consumer data sharing. The Financial Conduct Authority (FCA) noted ‘Respondents generally agreed with our proposal to create a new SCA exemption, meaning customers would not need to reauthenticate with their ASPSP every 90 days when accessing account information via a TPP.’

  • From 26th March 2022, banks will only have to authenticate for the first access request of an account information service provider (AISP).
  • Consequently, AISPs will manage customers’ data by asking customers if they wish for data sharing to continue, allowing consumers to withdraw consent at any time.


Amazon no longer accepts Visa UK credit cards.

Photo credit: Christian Wiediger


Amazon no longer accepts Visa credit cards

Our news feed was awash with Amazon news, following its decision to no longer accept payments from Visa’s UK credit card customers from January 19. Amazon referenced the high fees Visa charges for processing credit card transactions. Previously, the company imposed a surcharge for customers using Visa credit cards in Singapore and Australia.

  • The retailer sent out an email to customers, reminding them to update their Amazon payment method.
  • Moreover, it is still accepting all debit cards, including Visa debit cards as well as non-Visa credit cards
  • It also announced that UK customers can apply for a reusable credit account from Barclays to spread the cost of purchases in equal monthly instalments.


The rise of account-to-account payment

According to Finextra, ‘The noise around account-to-account (A2A) payments is starting to swell as people pick up on the benefits.’ It’s predicted that A2A payments will account for 20% of all e-commerce payments, surpassing both credit and debit cards by 2023. This isn’t surprising given the significant risk of customer drop-off at checkout. According to AltFi, consumers typically must go through 10+ steps to complete a purchase. Open banking removes these barriers with seamless and instant payments from customers’ bank(s). As a result, customers no longer must enter their card details or fill in forms. Furthermore, face recognition or a fingerprint ensure that these payments are SCA compliant and reduce fraud.


Wealth management UX improvements

J.D. Power’s survey on mobile app satisfaction found that US wealth managers’ apps scored higher in customer satisfaction. It stated, ‘Overall customer satisfaction with wealth management mobile apps this year is 858 (on a 1,000-point scale), up nine points from a year ago.’ This increase can be attributed to performance factors like speed, user design and the range of services offered. However, despite the increase in customer satisfaction, wealth management apps in the US are still falling behind other financial apps. In other words, there’s still much wealth managers can do, when it comes to enhancing their apps and investing in digital tools. This will help clients consume educational information from market updates to personalised insights on their portfolio.


HSBC introduces new investment feature.

Photo credit: HSBC Media Gallery


HSBC bank introduces new investment feature

At the beginning of December, HSBC announced that UK customers can invest £50 in five steps through its mobile app. Research commissioned by the bank revealed that 62% of adults aged 18-34 thought they don’t have enough money to invest. By opening a Global Investment Centre Account, customers can choose from ten ready-made HSBC global strategy portfolios. This selection also includes five HSBC sustainable fund portfolios. HSBC has stood out from other banks, thanks to its three pillars, which have helped create a data-led future.


Barclays’ survey reveals pitfalls of unregulated BNPL

Barclays’ survey revealed that 36% of respondents (more than one in three) do not grasp the consequences of missing ‘Buy Now, Pay Later’ (BNPL) repayments. The survey highlighted the need for regulated lending and consumer protection. Robust affordability assessments paint an accurate portrait of a customer’s personal financial circumstances. Antony Stephen, CEO of Barclays Partner Finance called for better consumer education. He noted, ‘Too many people are taking out these loans without realising the impact it could have on their finances and with festive shopping in full swing.’

Furthermore, the bank found 19% of respondents didn’t know that some BNPL providers charge late fees for missed payments. These fees can negatively impact customers’ credit scores. Purchases made with credit cards and regulated point-of-sale loans are covered by Section 75 of the Consumer Credit Act. This means consumers can get their money back for regulated products that are faulty or non-delivered. With unregulated lending, these protections are not in place.


Open banking budgets rebounded in 2021

At the end of November, the open banking platform, Tink shared its latest research revealing an increase in spending amongst Europe’s executives. It found this ‘budget allocation was likely driven by the need to put significant investment towards the creation of compliant PSD2 APIs, as well as the task of overhauling legacy infrastructure to meet current and future open banking needs.’

  • Wealth management firms experienced the strongest increase in budgets (58%).
  • Payment related services remain the top spending priorities.
  • 72% of financial institutions view payment initiation services as the most important use case.
  • Improving the customer experience and onboarding process claimed second place on executives’ priorities list.


Open banking points to consider

Following Amazon’s announcement, industry insiders asked, ‘Have cards reached their expiry date in a world of instant payments and borderless commerce?’ Undoubtedly, it’s an important question for business leaders to consider in 2022.


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