Open Banking can boost Loyalty, Protecting Vulnerable Customers, and Removing Payment Friction


In today’s world of surging energy prices and a relentless cost-of-living crisis, customers are continually seeking value and seamless experiences from their telco and utility providers. For forward-thinking businesses, this presents an opportunity to stand out. Open banking, a financial innovation that has been gaining momentum here in New Zealand, will be a game-changer in the utility industry, enhancing customer loyalty, safeguarding vulnerable customers, and streamlining payment processes.

Onboard Customers Quicker:

Traditionally, setting up direct debits for utility bills has been a cumbersome process, prone to errors and delays. Customers often need to manually enter their bank details and verify their accounts, adding unnecessary friction to the experience.

Open banking simplifies this process significantly. Companies like PayPal and Billogram utilise open banking to pre-populate and verify account details in real-time, allowing customers to set up direct debits securely in just a few clicks. This streamlined onboarding process reduces churn and increases conversion rates by an average of 20%, making it easier for customers to choose and stick with your services.

Check for Customer Vulnerability:

Identifying and supporting financially vulnerable customers is crucial. Open banking provides access to real-time transaction and balance data, enabling telcos and energy suppliers to gain insights into their customers’ financial situations.

Companies like American Express and Bank Norwegian leverage open banking to analyse customer income patterns, assess affordability, and anticipate bill payment abilities. Additionally, businesses can verify customer balances using Account Check, optimising the timing of direct debit collections and reducing the risk of unnecessary fees for customers.

Enable Faster Payments:

Traditional payment methods, such as direct debits and manual bank transfers, are slow and painful for both customers and businesses. These methods also pose security and compliance challenges.

Open banking offers a more efficient and secure payment solution. Customers can pay their bills or invoices instantly in a few clicks, thanks to open banking APIs. For instance, Kivra, a digital mailbox provider, allows users to pay their invoices directly within the app, with payments taking less than 45 seconds on average. This eliminates human errors and expedites the payment process.

Reducing Fraud:

Open banking enhances payment security for energy suppliers by providing more robust authentication methods. Payments made through open banking APIs require customers to authenticate using at least two of the following factors: something they know (e.g., a password), something they are (e.g., a fingerprint), or something they have (e.g., a mobile phone). This ensures that payments are made by authorised individuals, reducing the risk of fraud.

Furthermore, open banking may enable banks to validate customer address details, allowing suppliers to match billing addresses with supply addresses, closing another potential avenue for fraud.

Avoiding Card Payment Fees:

Many utility suppliers offer card payments as an option for customers who fall behind on their bills. However, card payments come with processing fees and require authentication.

Open banking offers a secure alternative to card payments, allowing suppliers to authenticate customers remotely and process payments in near real-time. By avoiding expensive card network fees, utility companies can pass on cost savings to customers or reinvest them in their operations.

To sum it up:

Open banking is reshaping the utility industry by enhancing customer experiences, protecting vulnerable customers, streamlining payments, and reducing fraud. Companies that embrace open banking technology can gain a significant competitive advantage, offering real-time, secure, and convenient payment options to their customers while saving on operational costs. As the open banking ecosystem continues to evolve, it’s an exciting time for utilities to explore new ways to innovate and provide value to their customers.

If you’re interested in learning more about how Qippay will be revolutionising the utility industry with open banking payment solutions, don’t hesitate to get in touch.

Open banking represents a brighter and more customer-centric future for the energy and telco sectors.