Insight: How Open Banking will change gaming

Kamran Hedjri,
24 Aug 2023

The i-gaming industry has undergone a significant transformation in recent years, driven largely by technological innovation, not least in improvements to the payment methods available to players.

Today, there are an estimated one billion online gamers worldwide, according to Statista, all with their own preferred way to pay, from cryptocurrencies, to mobile payments and digital wallets.

But many gamers and gaming operators have yet to recognise how Open Banking can transform the gaming experience for both gamers and operators.

Operator benefits

Neobanks and other fintechs have long since embraced Open Banking to link to their customers’ external accounts, streamline onboarding, and offer personalised financial advice, among other services. However, the gaming industry is just beginning to leverage the same technology, and is now discovering the range of benefits Open Banking can offer.

Because gaming operators can connect their app or website directly to a player’s bank account through Open Banking, they can access account ownership data to use in the KYC process and analyse transaction history to help tackle fraud.

Kamran Hedjri, group CEO of PXP Financial

The payment process is incredibly secure. When making an online payment, the player is not redirected to an e-payment interface, such as a credit card payment gateway. Instead, when a player wants to fund their account, operators can execute direct payments as a trusted holder of login and transfer credentials that have been pre-authorised by the player.

Not to mention, of course, it is a cost-effective option for gaming providers, allowing them to avoid the high fees associated with traditional payment card payment methods.

But, perhaps most importantly, Open Banking can transform the overall player experience. It allows operators to view and access real-time data to see player’s spending habits and, in turn, offer a more personalised experience – something that’s more important than ever, as the need to convert and retain loyal players is critical to long-term success.

This technology also gives operators a greater understanding of gaming spend in the context of a player’s broader financial situation, allowing them to identify potential vulnerability. They can even analyse outgoings, such as loan and rent payments, to identify at-risk players, and block gameplay or put spending caps in place.

Operators have a duty to protect their customers, and leveraging Open Banking technology is a great way to demonstrate responsible operations.

Player perks 

Players also benefit, in part, because the gaming provider only receives transaction confirmation from the player’s bank, which reduces the risk of fraud and identity theft. Furthermore, Open Banking is a convenient way to pay, as it mitigates the need for players to enter their banking details every time they make a transaction.

While these are practical applications, the idea of instant payouts to any account are an attractive proposition. When a player wants to withdraw winnings, the operator can use Open Banking to instantly payout to any account using the same method that was used to fund the account – giving players that all-important seamless experience.

The future is open

The potential for Open Banking in the i-gaming industry is huge. According to data from Future Market Insights, the Open Banking market is expected to reach $158.6 billion by 2032, growing at a compound annual growth rate (CAGR) of 23.2% for 2022-32. While its use is becoming more prevalent, there are still barriers to widespread adoption in the gaming industry.

For example, while making payments is secure and regulations are in place to protect consumers, bad actors are always on the lookout for new ways to exploit even the most secure of technologies. But with Open Banking, customers are never asked to share security details, and are asked to authenticate themselves. Furthermore, Open Banking is done via secure Application Programming Interfaces (APIs), and all data is encrypted.

Nevertheless, all consumers have come to expect seamless, secure digital payments, and gamers are no exception. In other words, gamers want to play, not pay. Open Banking is a great way to meet these expectations and has the potential to dramatically change the industry for the better.

Gaming operators should look for a payments partner to help them realise this potential. Payment methods preferred by players in the gaming sector go way beyond the traditional mix. That’s why it’s important to offer the right combination of global and local alternative payment options, including wallets, vouchers and online banking, to make sure players can cash in any way they like.

But, what sets Open Banking apart is that it really puts the player experience and safety front and centre.

Kamran Hedjri is group chief executive officer of PXP Financial