The financial world is currently undergoing a revolution in the form of open banking, ever since the the UK’s Competitions and Markets Authority (CMA) declared in 2016 that high-street banks did not compete hard enough for their customers.

In the last year, the gates have been thrown wide open to software developers. There are now a number of third-party operations that you can integrate with your account to save you money or check your spending.

Open banking and gambling

This latest development has been coined “open banking”. The Treasury has forced reluctant banks to develop application programming interfaces (APIs) to allow individuals and businesses to share their data with other companies.

This has led to innovations such as the Monzo bank card, where individuals can separate their spending into “pots” and also declare self-exclusion on some websites. This self-imposed block then kicks in when a customer tries to transact on a gambling website.

Right now gambling is big money. A total of ￡5.4bn ($7bn) was gambled remotely in the UK in the year up to March 2018. Now, open banking will not only put customers in control but also allow operators to take into account individual finances.

Previously, gaming organisations were unable to know what people can afford to stake. A modest wager for one customer could be an entire month’s disposable income for another.

Operators jumping on board

Back in January, Experian launched the first affordability check for gaming websites, which will assist in ensuring people gamble affordably. The affordability check can be made at the most appropriate point for customers, such as when there is a change in their account behaviour or specific behaviour that may indicate an increased risk.

Once a customer has given their permission, Experian’s open banking service allows gaming companies to understand a person’s disposable income, their weekly income and expenditure, and how much they spend with other gambling websites.

It’s no surprise then that some operators are jumping on board, keen to work with responsible gambling applications and avoid the hefty fines of the ASA and UK Gambling Commission. Indeed, Rank Group is already trialling this service for a proof-of-concept.

Banks gradually catching up

The new competition element is aiding banks in developing their own tools to help gamblers. Barclays recently introduced a feature whereby alerts occur when customers make repetitive transactions on habit-forming activities on gambling and gaming sites.

Previously, banks’ reluctance to jump on board stemmed from potential losses in profit; the Bank of England predicted the largest lenders could lose more than ￡1bn ($1.3bn) by 2023.

But while the banks might be losing out and forced to innovate, consumers are certainly winning. In January 2019, just one year after the launch of open banking, the Open Banking Implementation Entity counted 23.1 million open banking API calls – up from 3 million in July 2018.

At the last count in January there were 104 regulated providers, including 71 third-party providers and 33 account providers.