One of the key benefits of open banking is Variable Recurring Payments ( VRPs ). This allows money to be switched between a consumer ’ s own accounts on an automatic basis , for example , moving surplus funds from a current account into a separate savings account . A new development of this called ‘ non-sweeping VRPs ’ is on the horizon , which will enable the same for commercial payments . Ultimately , this is set to replace direct debits and standing orders , which have now been around for decades and rely on clunky technology . A move to VRPs allows for better security and more flexibility , as well as lower fees and no chargebacks – great for both business and consumers !

Saying that , nothing is without its downfalls and there have also been concerns around the dominance of US companies , like Mastercard and VISA , within open banking technology . This concern has strong roots in the European Union and prompted the Third Payment Services Directive ( PSD3 ), which aims to foster competition amongst payment service providers by granting access to market competitors through mandatory APIs . By requiring businesses to provide APIs , they will be able to communicate with numerous banks and financial organisations , rather than relying on a handful of providers , improving competition and innovation within the sector . Although PSD3 won ’ t automatically be applied in the UK as it would have done when we were a member of the EU , a similar trajectory is anticipated .

Open banking is going to be a significant change for the future of payment technology , but some of the oldest processes in the game are also set to change given recent industry advancements . For years , optical character recognition ( OCR ) has been utilised to automatically enter information from scanned invoices into business systems by converting the image into text . Initially seen as the ‘ nirvana ’ of payment processing , 25 years later several complexities remain , and the process is still prone to error . Data extraction using Artificial Intelligence ( AI ) – rather than using pictures of data – will soon process invoices far more efficiently .

The future is bright and new developments are happening all the time as the finance industry begins to fully embrace the opportunities that new technology has to offer . Finance folk have typically been a conservative audience who like to stick to the status quo , but we shouldn ’ t shy away from the latest developments that could put us on the path to success ! �

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