By 2023, the iGaming sector is predicted to grow by 50 per cent of its value in 2020. This growth will be massively impacted by the simplicity of payments – namely the introduction of open banking. With a data silo that will enable quick onboarding of new customers whilst also analysing any addictive tendencies customers may have, open banking will be a big catalyst in the iGaming market’s development.
Rolands Mesters, co-founder and CEO of Nordigen. Speaking to The Fintech Times, Mesters discusses the role of open banking in gametech innovation and how it helps keep the industry responsible:
Open banking is incredibly versatile and the practice is continuously spreading across various industries. Many industries benefit from innovation enabled by open banking. Two sectors, in particular, that will continue to drive innovation through open banking are online gambling and gaming.
According to data provided by Statista, online gambling was worth $66.7billion in 2020, with an expected growth of $92.9billion by 2023. Similarly, the number of online gamers is continuously growing with 2.96 billion active digital players recorded in 2021. Gaming itself may not be directly aligned with open banking, however the growing rate of in-game microtransactions is.
Improving experience increases the number of users
Online gambling and gaming has never been more effortless with a shift to mobile facilitating on-the-go and easy to access entertainment. With these types of applications being so easily accessible, it is natural that customers are starting to expect everything else to be quick and simple, including making bets, receiving payouts and purchasing in-game items, all without the hassle of getting your wallet out. A study found that players within the European market prioritise fast payments, instant withdrawals, and payments via bank transfers. Open banking presents an opportunity to meet these expectations and drive customer loyalty by satisfying their transactional desires and needs.
Digital wallets have started streamlining the process, but open banking can take it further, greatly improving the user experience of gamers and people who like to gamble through easier, secure and direct payments. Open banking users benefit from direct authentication and payments, easy and safe account top-ups, as well as fast payouts. Furthermore, open banking enables iGaming companies to fight fraud by accessing account data and analysing the transaction history of their customers. Additionally, open banking could assist gambling organisations with improving the process of onboarding new clients by automating and improving the KYC (Know Your Customer) procedure.
Services, such as Kindred’s “Play and Withdraw” is an example of a system already in place due to a gambling and open banking collaboration. The service allows customers to deposit and withdraw money instantly and seamlessly, and also manages all customers’ financial accounts, securing their funds similar to the way a bank would.
Novel ways to protect users for a continued secure experience
Open banking will no doubt have a long and beneficial role within the growth of online gaming and gambling industries. Not only because of how simple it allows the process to be for both the user and the operator, but also the potential that it has in establishing the most safe and secure environment for users to gamble and spend their money.
Monzo’s gambling self-exclusion system was the first bank-led program that allows customers who feel they can’t control their gambling urges to request automatic blocks to be performed on transactions with identified gambling merchant codes. This is a great way for customers to keep themselves accountable, however, this may not be beneficial for clients who are too far deep into a gambling or online gaming addiction.
Instead of relying on customers to highlight their addictions, gambling and gaming operators can design systems through open banking that connect directly to bank accounts and analyse the spending habits of their users and can flag patterns of dangerous gambling and overspending behaviour based on account transaction history.
New users attempting to sign up to gambling platforms could go through an identification process, allowing the operators to scan through bank account information to accurately decide on whether a user exhibits addiction behaviour and how much debt they have acquired through other gambling sources. Users that do not pass the test can have financial limits placed on their activity on the platform, or if there are too many red flags, they could be blocked completely. A similar process could be created for online games that rely on microtransactions, with flagged clients not being able to spend over the limit placed on them.
With open banking obtaining the newest, up-to-date information, these checks will always be accurate and can prevent individuals from falling into debt traps. Similarly, users that do not exhibit signs of spending addiction, but instead have lower income levels can also have the platform adjust to their situation, placing tailored betting limits that will help them stay on top of their finances while they safely enjoy their gambling experience. The source of income used could be analysed before bets are accepted, with funds obtained from government benefits or child support money being rejected for use in gambling.
All in all, open banking isn’t just a driving force for the growth of gametech, but it is also a security net for users and operators, helping paid-for online entertainment be a positive and safe space.
The first free European open banking API that provides regulated connections to major European banks. Featured by Techcrunch, Wired and Financial Times.
Rolands Mesters, co-founder and CEO: https://www.linkedin.com/in/rolandsmesters/?originalSubdomain=lv