Embracing Open Banking: A Golden Opportunity For Retailers In The Digital Age

The Open Banking Revolution In recent years, a significant transformation has swept through the banking sector, known as Open Banking. This paradigm shift, driven by regulatory changes and technological advancements, has opened up a new world of possibilities for online retailers. By 2022, Open Banking is expected to create a revenue opportunity of at least £7.2 billion across retail and SME markets. This article delves into what Open Banking means for the average retailer, especially those seeking to optimize their online transaction capabilities.

Understanding Open Banking for Retailers Open Banking refers to the use of open APIs (Application Programming Interfaces) that enable third-party developers to build applications and services around the financial institution. For retailers, this means access to a wealth of customer financial data (with their consent), leading to more personalized, efficient, and potentially less costly transaction processes.

Advantages for Retailers

  1. Enhanced Customer Experience: Retailers can offer more personalized shopping experiences by leveraging financial data to understand customer preferences and spending habits.
  2. Improved Payment Processes: Open Banking allows for direct account-to-account transactions, bypassing traditional card networks. This could lead to faster transaction times and lower processing fees.
  3. Access to Alternative Financing: Retailers can use Open Banking to offer customers innovative payment options like ‘buy now, pay later’ schemes, based on real-time financial data.

Challenges and Opportunities The introduction of Open Banking also brings challenges, especially for traditional payment methods. As Open Banking facilitates direct transactions, the use of debit and credit cards might decline. This puts pressure on traditional payment providers to innovate and adapt, which in turn could benefit retailers through more competitive pricing and enhanced services.

The Competitive Landscape Retailers must navigate a highly competitive and transparent Open Banking environment. To succeed, it is crucial to develop differentiated services that cater to specific consumer needs. Targeting affluent, young, urban populations might be a starting point, but as the market matures, retailers should expand and diversify their offerings.

Security Concerns While Open Banking offers numerous benefits, security concerns remain paramount. Retailers must ensure that their Open Banking solutions are secure and compliant with regulations like GDPR and PSD2, providing peace of mind to their customer.

Preparing for the Future As the Open Banking landscape continues to evolve, retailers must stay agile and adaptable. Embracing a customer-centric model, investing in strong data analytics, and integrating secure technology platforms are essential steps towards leveraging the full potential of Open Banking.

Conclusion: A Call to Action for Retailers The era of Open Banking presents an unprecedented opportunity for online retailers to revolutionize their transaction capabilities and customer interactions. By embracing this change, retailers can offer more efficient, personalized, and cost-effective services, positioning themselves at the forefront of the digital commerce revolution. The future of banking is open, and for retailers willing to adapt and innovate, it holds the key to a new world of opportunities.

Source: PWC report The Future of Banking is Open 

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Post-Brexit: data protection
Card processor sends sensitive data to wrong address
24 August 2022

Worldline SA subsidiary Payone GmbH has been accused of breaching data protection rules after it sent sensitive employee payroll information to the wrong address by accident. The Worldline Group holdS a 60% stake in the Frankfurt based company who have a small UK market presence.

In June 2021, one of Payone GmbH’s ex UK employees (the data subject) received a “potential data breach notification” from the firm advising him that his salary, National Insurance data, nationality (Special Category Data) was amongst various bits of information sent to an incorrect home address.

This included personal information such as the former employees name, age and address.  It also included details such as the date of birth and the amount of annual work bonus he received in his bank account amongst other identifiable data.

Payone GmbH confirmed that this document was sent out in error following an employee making a mistake when re-entering data processed by their third-party payroll provider.  The error arose when the employee was fulfilling an Article 15 GDPR request. The error was spotted by the data subject when he noticed in an email version of the document that the postal address was incorrect. An attempt to notify Payone GmbH of the error went in vain as the document was already irretrievably despatched.

The data subject was alarmed with the incident which exposed him to the possibility of fraudulent activity, amidst reasonable fears his data could end up on the dark web and used by criminals.  Habitually resident in the UK he complained to the Information Commissioner’s Office (ICO) in June 2021. He similarly raised the concern in Germany via The Hessian Commissioner for Data Protection and Freedom of Information (HBDI).

The ICO reprimanded Payone GmbH for the error in their final decision letter.
Similarly, the HBDI cited a violation of Article 5(f) of the General Data Protection Regulation (GDPR) relating to integrity and confidentiality.

The ICO stated in their July 2021 findings that Payone GmbH, “should take steps to ensure that all personal data records are accurate and up to date. Holding inaccurate information, such as addresses, does increase the risk of personal data breaches and poses risks to the security of information”.

The HBDI confirmed in their October 2021 findings that Payone GmbH had taken remedial action. They concluded that a monetary fine would not be imposed on Payone GmbH as they had taken technical and organisational steps in response to the data breach. Data subjects could now request their data in an autonomous portal.

The GDPR, which came into effect in 2018, gave the Information Commissioner’s Office greater powers to tackle data breaches. The new ‘UK GDPR’ charts its own course after Brexit whilst seeking to maintain EU GDPR adequacy.  In extreme scenarios, organisations face penalties of up to £20m or 4 per cent of their global worldwide turnover, whichever is more.

In the years prior to GDPR, the ICO fines were capped at £500,000.

The data subject said: “I am just glad I spotted it; they were going to resend the document again to another wrong address. Prior to Brexit the process would have been commenced via the ICO who in turn would liaise with the HBDI on the data subjects’ behalf; but I found myself communicating with both authorities separately which was an additional step but in the end was surprisingly
effective. Unfortunately, Payone GmbH again sent my incorrect address to the
Workers Pension Trust in January 2022, and documents yet again went to the wrong address. In my opinion they have not learned from the first time and my complaint is sitting with the ICO yet again”.

The former employee is pursuing a remedy under Article 82 UK GDPR via
the Court’s of England & Wales.

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