Jim Wadsworth, Mastercard: Open Banking – The Frictionless Future of Payments

Towards the end of last year Jim Wadsworth, Senior VP Open Banking at Mastercard, did a global study of what’s going on, on the “The State of Pay” of Open Banking.

The big thing for him was just another confirmation that the whole open payment thing is just everywhere. If anything, they saw more appetite and more demand in “developing markets” in terms of consumer ambition, desire and just sheer want to get access to these sorts of services.

Regarding accelerate the adoption of open banking payments, it all comes down to trust. If customers trust the brand with which they’re engaging then it’s a very easy journey to get people starting to use Open Banking for a range of services including payments. Things like transparency, things like putting things right quickly if there’s a problem, they all shine through. If people trust the service they’re using, they will use it. It’s a quick adoption.

Things like prepaid top-up type use cases, those concerns don’t exist and customers are enthusiastically embracing use of Open Banking payments for those sorts of methods, because it’s simply better than the alternatives.

It’s very interesting when you look around the world and what’s going on in different geographies. The trend to earn from banking is everywhere, from develop markets to developing markets. Every territory is moving down the same path, from Africa to Europe, although local dynamics are different in these territories.

What works in country A may not work in country B because of economic limitations. But the underlying needs are same which is how one wants to be able to access his money or data when he wants to or how he wants to. The service providers could be banks or telcos.

What the research team have seen around the world is just a very substantial move from cash to contactless and initiatives like increasing the contactless threshold limit and so on. But cash will still have a role to play for a long time to come in many economies though because of the anonymity.

It’ll be interesting to see what happens with fiat digital currencies over time, how that does play out. But, it’s got a fair way to go yet.

Right now, we are at the early stages of Open Banking. Most people would agree that over the long term it’s going to become mainstream and whatever form it takes, Open Banking, Open Finance, Open Data et al, in due course will become an important part of the whole financial services and adjacent ecosystems.

A very large proportion of populations have had to get more comfortable with more digital tools like Zoom or equivalent applications and in that sense within the context of banking and payments and other sub services, that will help overcome resistance to trying out and adopting new digital services. There are some keynote examples, like charity giving in the pandemic, which is great to see.

The bigger picture will be accelerating further adoption of digital tools and therefore Open Banking will benefit from that over time.

The current state of Open Banking adoption is in the early stages. The UK is growing rapidly in terms of usage both payments and non-payment use cases, while mainland Europe has some ways to go to catch up. It’s touched on a bit in India and China and arguably, after India perhaps, the US is the world’s biggest Open Banking market and it’s achieved that without the benefit of regulatory intervention.

In the UK, even before the regulations came into play, HSBC was one of the first big players to launch something. They did that through partnering with smaller, nimbler Fintechs and those relationships have progressed and been deepened. Some traditional banks are succeeding in refreshing their digital infrastructure and some will probably find that a bit harder than they thought.

Catalysed by Open Banking, according to Jim Wadsworth, he won’t call it Open Banking but that phenomenon will be the norm in which we all, be that as consumers or businesses interact with our money. Open banking will be open 24/7 but it won’t be bricks and mortar.

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