How bank transfers are changing for the better

We’ve all been there. Typing out that never-ending string of numbers and letters, double-checking if we've got it right, and wondering if there's a better way to pay. Spoiler alert: there is. 

Say goodbye to tedious manual bank transfers. Things are getting a lot easier thanks to changing payer expectations and wider adoption of open banking payments. Merchants don’t need to send their bank details in a PDF, asking customers to set them up as a payee and then complete payment. Which is two separate authentications if not an existing Payee.  Serious friction. Now, it's all automated. From a secure, branded checkout, payers then simply authorise the payment via their mobile banking app. Simple, quick and seamless. 

Payer Priorities: Speed and Control

Let's face it - in a world where instant gratification is the norm, typing out lengthy IBANs is far from appealing. Payers want ‘invisible’ payments that match their fast-paced lives and fit into their daily routines. Whether they're in a physical store, shopping online, or diving into virtual experiences, the expectation is clear: no fuss, just instant payments. 

And who can blame them? Nobody wants to waste time inputting sensitive bank details when they could be doing something more exciting. Gen Z represents the highest share of consumers who exclusively use digital banking, with 60 percent indicating that they would switch financial institutions for a better mobile or digital experience. 67 percent of this cohort also believe that automated payments will reduce time at checkout and enhance their overall shopping experience. In reality, two factor authentication requirements for online shopping has pushed all age cohorts to a place where open banking payments are simple.

But it’s not just about frictionless payments, it’s also about greater control. Today’s shoppers value control over their payment methods and who can access their financial information. They want to take charge of their entire shopping experience and pay at their convenience, from any location, and using any device. They crave a native shopping journey that allows them to authenticate payments with a simple tap in their mobile banking app, without having to divulge their bank details. 

IBAN Discrimination: A Barrier to Financial Equity

IBAN discrimination is a longstanding issue in the EU, despite being outlawed in 2014. Simply put, it occurs when banks reject an IBAN for euro payments due to its country code. Payers face discrimination when using foreign or payment service provider IBANs, while fintechs feel the ripple effects as potential clients weigh their options. It forces all players -  businesses, paytechs, and payers - to stick to local IBANs, not exactly the recipe for a thriving payments ecosystem. 

The Solution: Open Banking - Instant and Secure Payments

The EU recently shook hands on a game-changing deal for instant payments. It's a move that demands banks to provide instant credit transfers in euros and opens central bank payment rails to non-bank players. It's like a backstage pass to quicker, more efficient transactions at no extra cost. It promotes a smooth and inclusive payments landscape where open banking can thrive. 

According to Juniper Research, the global value of open banking-powered payments will surpass $330 billion USD by 2027, up from $57 billion USD in 2023. Furthermore, emerging use cases like bill payments are anticipated to contribute over $59 billion USD in global transaction value by 2027, expanding its potential.

Open banking is a win-win for both businesses and their customers alike. For businesses, it shields high-value transactions from fraud by eliminating chargebacks. Projections indicate a 61 percent reduction in fraud by 2024, thanks to advanced encryption and real-time authentication through open banking APIs. It allows businesses to get paid in seconds, cut costly payment operations and card transaction fees, and streamline their payment processes. 

For customers, they have the power to selectively share their financial data. Open banking lets them choose who gets access to what, putting the control firmly in their hands. No more worrying about mistyping account details. With open banking, they simply select their bank, log in to their mobile banking app, and confirm the payment in a familiar setting. It's the kind of simplicity that erases the fear of transaction typos.

Payments Innovation: A Toast to the Future

Today’s shoppers want more than just a transaction; they seek a convenient and frictionless experience - and here’s where paytechs come in. 

Businesses can boost payment success by offering a range of payment options through a cutting-edge payments platform. They can supercharge profitability with seamless bank and card checkouts that follow their customers wherever they are, however they want to pay - via SMS, email, web chat, messaging apps, and can be integrated to websites to provide online payments.

Advanced paytechs offer their clients a range of payment orchestration controls. These tools empower businesses to effortlessly toggle between open banking, card, and other payment methods depending on variables such as geographic location, customer, purchase type, and value of the transaction. Payment orchestration increases open banking adoption and allows retailers to save on high card processing fees, eliminate chargebacks, and double their payment volumes.

With features like setting chase paths, reminders, recurring payments, and group payments, payments technology is the toolkit businesses need. Payments innovation doesn’t just make payments easier - it's a strategic move for businesses. By harnessing data through live tracking, reporting and analytics, businesses gain insights into purchase patterns and preferred payment methods. This isn't just about completing transactions; it's about building lasting relationships with customers. 

As we bid adieu to manual bank transfers, payer expectations and payments innovation are steering us towards a future where payments are not just transactions but an extension of your brand. Open banking and advancements in payments technology are the vehicles driving us there, promising quicker, safer, and more customer-friendly payments.

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About the author

Serial paytech entrepreneur Donal McGuinness is CEO of Prommt. He studied Information Technology at DCU and Telecommunications Engineering at DIT and spent the early years of his career in the telecommunications industry. His experience in mobile payments dates to 1999 when he founded his first mobile payments company, ItsMobile. 

Donal has a passion for payment innovation and believes the next 2-3 years will see a rapid acceleration of innovation in payments. Donal’s experience over the last 25 years crosses over mobile payments, B2C and B2B payments, Money Remittance, ID verification and loyalty platforms.