Emerging open-banking propositions; How to solve declines and increase payment authorization rates - Part 1; How to implement a marketplace?;
This week's Fintech Wrap Up focuses on open banking and boosting payment authorization rates.
Insights & Reports:
1️⃣ Emerging open-banking propositions
2️⃣ How to solve declines and increase payment authorization rates - Part 1
3️⃣ The UK Payment Landscape
4️⃣ From open banking to open finance
5️⃣ How to implement a marketplace?
6️⃣ EU regulations on open banking, instant payments and digital identity
Curated News:
1️⃣ Monzo Bank Announces First Full Year of Profitability
2️⃣ Bunq, the $1.8 billion European neobank, hopes to secure license for UK expansion this year
3️⃣ US expansion pushes up credit losses at Klarna
TL;DR:
This week, I am diving deep into a few key areas that are shaping the future of finance: open banking, improving payment authorization rates, and the evolving payments landscape in the UK.
Open banking is revolutionizing the way financial data is shared. In the UK, we're seeing a surge in both infrastructure providers that power these connections and customer-facing solutions that leverage this data to create innovative products and services.
For example, Xero uses open banking to streamline accounting for small businesses, while Yolt provides a one-stop shop for consumers to see all their accounts in one place. This trend is expected to continue in Europe, with new regulations like FIDA creating a framework for even broader data sharing across the financial industry.
Are you a business owner frustrated with declined payments? You're not alone! This week, we also looked at some practical tips to improve your payment authorization rates. The most common culprit for declines is simply insufficient funds. To combat this, you can offer alternative payment methods like digital wallets or buy now, pay later options. Additionally, for subscription businesses, consider shifting your billing cycle to a time when customers are more likely to have the funds available.
The UK payments landscape is changing rapidly. While cards still dominate point-of-sale transactions, digital wallets are gaining serious traction. It is expected contactless payments through mobile wallets to more than double in the next few years. Interestingly, account-to-account (A2A) payments are lagging behind, but new regulations and the growing popularity of QR codes could see this change. Buy now, pay later (BNPL) is another area witnessing steady growth, offering consumers more flexibility when it comes to managing their finances.
With open finance on the rise, traditional banks have a big decision to make. They can simply comply with new regulations or take a proactive approach and leverage open banking to create new value propositions for their customers. By becoming data orchestrators themselves, banks can offer more personalized products and services, ensuring they stay competitive in this evolving landscape.
I also explored the key considerations for implementing a successful online marketplace. Integrating various systems seamlessly is crucial, especially when it comes to managing payments. Fortunately, there are solutions available to automate these processes and simplify the launch of your marketplace.
Big news Monzo, the UK's biggest digital bank, finally turned a profit! They raked in £880 million this year, which is a big jump from last year. Sounds like their plan to diversify their income streams is paying off.
Speaking of expansion plans, Bunq, a European neobank, is hoping to snag a UK banking license soon. They've got their eyes set on British shores! On the other hand, Klarna, the buy now, pay later giant, is facing some growing pains as they expand into the US. Seems their aggressive strategy might be leading to some credit losses. But hey, that's the risk you take, right?
Insights
Emerging open-banking propositions
Propositions fall into two main categories—infrastructure providers and customer-facing propositions, with customerfacing propositions further split into augmentations to existing products and entirely new customer experiences.
— Infrastructure providers: In the last two years, many players in the UK have started providing the engine by which other companies, such as fintechs and banks, can offer digital financial solutions without the need to build everything themselves. In the UK, almost 30 percent of open-banking license holders are infrastructure providers (the remaining 70% are customer-facing propositions). This has had a multiplying effect on market innovation since these providers make it easy for others to launch or offer new products and services more quickly. Some providers, such as Truelayer, provide data access and transfer on the back-end via APIs that power consumer-facing propositions. Others, such as the pan-European player Tink, offer a complete end-to-end solution for payments, transaction aggregation, risk analysis, and financial management.
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