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UK asset management company Hargreaves Lansdown (HL) has teamed up with compatriot open banking provider, Ecospend, to facilitate clients to pay directly via their bank.
The partnership will remove the need for customers to enter their card details when transferring money to their HL account, reducing data entry errors and card fraud risk.
The transfer will be authorised by the clients’ open banking service typically using a biometric ID.
The omission of cards in the payment rail will also speed up the money transfer process while getting rid of the interchange fees, saving costs to HL.
The service is scheduled to go fully live by the end of the year, with a phased rollout to beta users beforehand.
The collaboration marks the culmination of HL’s assessment of the open banking market in February.
In March, the company partnered with US payments technology group Bottomline to utilise the latter’s cloud-based payments platform Bottomline PTX. The platform provided HL with new payment functionalities, including open finance.
The recent partnerships boost HL’s payment technologies and form part of the group’s five-year strategy to invest £175 million in its digital transformation. During that period, HL intends to move from legacy to new systems.
Beyond payments, the company is also reportedly looking to leverage technology to provide hybrid advice to its clients to retain their customs.
HL is the latest financial institution to tap into the open finance services provided by the fintech companies.
Market’s adoption of open finance services grows
Since the implementation of the PSD2 directive, the adoption of open finance services has been growing on an annual basis.
According to the latest June 2022 report by Open Banking Implementation Entity (OBIE), an estimated 1 in 10 digitally-enabled end-users were using at least one open finance-enabled product or service in March 2022, up from 1 in 16 same time last year.
OBIE also stated that open finance payments stood at £21 million between September 2021 to March 2022, up from £12.3 million in the preceding six-month period.
The increasing number of open finance payments is underscored by the large financial institutions embracing access to embedded solutions.
For instance, UK investment management group Nutmeg connected with open finance platform Yolt back in 2020.
That same year Credit Suisse also made available two new open finance interfaces to give third parties access to real-time data on securities and FX transactions.
In June last year, HSBC introduced an API developer portal to allow businesses to integrate the API with their products for access to payments, account information, and custody holdings, among other services.
Earlier this month, challenger bank Revolut also streamlined its money transfer process by integrating with Swedish fintech Tink’s API.
Revolut users are now able to connect their bank accounts to authorise and transfer money directly into their Revolut account without leaving the app.
Firms spend money to boost capability and get returns
Beyond integrations, open finance has also provided investment opportunities as the market continues to expand.
According to payments consultant, Penser, the open finance market size is expected to reach $39bn by 2026, growing at 46% between 2019 to 2026.
To capture the market, BNP Paribas, last year, launched its own instant payments initiation service, Instanea, in collaboration with the open finance payments platform, Token.
Last month, open finance platform Yapily acquired German peer finAPI to strengthen its European presence whilst adding a customer portfolio of over 50 large enterprise firms in the finance, insurance, and IT industries, including ING, Datev, Swiss Life, ImmobilienScout24 and Finanzguru.
In April, French financial data aggregator, Budget Insight, scored a $35 million investment from growth equity firm PSG equity to scale up its business across Europe and the US.
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