Benefits of open banking for mobile and broadband providers
Open banking can also help telecoms providers deliver financial and administrative efficiencies, and in some instances, improve the customer experience.
Open banking payments
Offering open banking as a way to pay means mobile providers can streamline some of the administrative burden associated with traditional billing and collection systems, speeding up collections, helping to minimise the risk of payment delays and defaults to ensure more consistent cash flows.
In terms of customer insights, open banking data can help telecoms providers analyse a customer’s payment history and usage patterns to suggest more cost-effective and personalised payment plans, including automate the process of switching to a better deal when one becomes available. This can boost customer satisfaction, support customer retention and potentially reduce the costs associated with new customer acquisition.
Managing risk and reducing fraud
Analysing customers' financial health in near real-time, giving an accurate snapshot of customers’ finances enables mobile and broadband providers to better assess the risk of offering credit or extended payment plans, reducing the likelihood of bad debt, and in some instances, enabling providers to recover some losses rather than none.
The accuracy of open banking-driven financial assessments can also enable mobile and broadband providers to offer services to potential customers without a traditional credit history, such as overseas students or people new to the country.
It could also help reduce the incidence of fraud. Linking payment systems directly to customers’ bank accounts could allow providers to implement stronger security measures that cut the costs associated with fraud mitigation and loss recovery.
Virgin 02 Media updates the Direct Debit
Virgin 02 Media has always had a strong focus on delivering a positive customer experience. This includes offering flexible payment options that are tailored to fit consumers’ and businesses’ differing financial circumstances, and the importance of ensuring straightforward transactions for both one-off and recurring payments.
Earlier in 2024, Abraham Georgakarakos, VP Digital and eCommerce at Virgin Media O2, announced that the firm had completed its pilot test of open banking payments and was ready to expand its use.
Speaking to Doug Mackenzie, Fintech Fringe Head of Content, on the Fintech Finance News Payabl podcast, he explained the importance of enhancing both billing and the payment experience for customers by providing complete transparency pre- and post-purchase, not just for contracts but for additional purchases, such as apps.
Virgin 02 Media was also the first UK telecoms company to automate the Direct Debit experience through open banking, streamlining the entry of Direct Debit details. Courtesy of a third party fintech platform, customers are able to auto populate forms via their mobile banking app, without having to key in account details or remember store codes.
Virgin also offers new customers the option to use Apple Pay, Google Pay, and debit/credit card options to make recurring/contract payments. These provide a flexible alternative to the Direct Debit.
Looking ahead, Abraham also highlighted the value, to both telecoms companies and customers, of open banking-enabled affordability checks, citing them as a unique way to understand customer needs and spending patterns, as well as helping them to understand and optimise their own spending habits. (See VOXI for Now case study on p4)
