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The Impact of Open Banking on iGaming
By Shane Addinall Oct 13, 2022 TechnologyPlayers must clear administrative hurdles before enjoying safe online gambling entertainment. Open banking presents a list of benefits, including streamlined onboarding and improved security.Online gambling operators have their tasks cut out for them, considering regulators expect varying levels of KYC and AML processing and players want hassle-free gambling entertainment. Technological advancements allow relief on the payment solutions front, and open banking is a seamless enhancement that covers payments, KYC, AML, and player protection expectations.
For casino providers who transact in traditional currency, time is the biggest challenge because the most popular payment and identification solutions require a paper trail and various checkpoints. On top of these measures, regulators expect operators to track every player's gambling behaviour and establish that it aligns with their disposable income.
Open banking addresses all these points while offering players and operators a streamlined process while minimising the paper trail.
What is Open Banking?
Launched in 2018, open banking and PSD2 complementary regulatory initiatives allowed for open access to financial data and direct-to-bank payments for operators. Through open bank technology, players can choose to share their financial data with specified and authorised third-party providers and cut out lengthy authentication and payment processes.
Approval from the registered player means that casino operators gain access to the player's information as captured by their financial services provider and cut out the middleman. The operators get all the necessary information straight from the player's bank account, saving both parties much time and offering a more secure KYC process.
How Does Open Banking Improve iGaming?
Because operators need to verify a customer's identity and other sensitive information, traditional KYC and AML processes are time-consuming and require a player to submit documents. Service agents need to check these, and human error comes into the equation. Although some companies use highly efficient AI technology that detects fraudulent documents, players still need to share information, discouraging some from choosing a licensed provider.
Open banking solutions transform this daunting process into a simple authorisation procedure where the operator interacts with the player's bank. The operator has peace of mind that the details are verified and legal, and the player doesn't need to share more information with a third party. Instead of being tied up with admin tasks, customers get what they came for: gambling entertainment.
Along with identity and financial checks, open banking enables instant transfers. It offers a two-way solution where players instantly have funds to wager, and the same process applies when a withdrawal takes place.
The Future with Open Banking
While alternative payment options like cryptocurrency are gaining momentum, so is open banking. Many top-tier operators agree on the benefits of the new technology for regulatory requirements and player retention strategies. However, it is a more popular choice among certain EU nations, with the UK being the forerunner in open banking adoption.
Once players understand the impact open banking has on their time and security, the demand for this technology will increase throughout the industry. The onus lies with operators to present the solution and educate their players on what benefits it brings to the table.
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