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As the gambling industry and its regulators ponder how to balance the growing demand to diagnose gamblers’ financial vulnerability with customer privacy, open banking evangelists still believe the technology has a key role to play.
After years of waiting in the regulatory wings, a need for gambling operators to more closely monitor the financial status of their customers is becoming a reality.
Affordability rules have been in place in the Netherlands since last October and while the UK Gambling Commission is still holding back on confirming that its financial vulnerability checks will definitely become mandatory, it would be a major shock for them to be abandoned at this late stage.
Much of the focus in this area has been on how to reduce friction for the consumer. The fear is that cumbersome checks which clue a player in to the fact that their financial capacity is being analysed will drive them to black market sites where there are no checks of any kind.
From the moment that affordability as a concept first edged its way into gambling circles several years ago, open banking was seen as a potential solution.
What was then an emerging technology now enjoys the widespread adoption of protocols that allow trusted third-party companies to access and assess an individual’s bank account, providing a much less burdensome solution to assessing income than asking consumers to produce copies of payslips or bank statements.
Advocates of open banking say it can help to close one key gap in the current safer gambling ecosystem, to help track those at risk of harm as they hop from operator to operator.
While a very small number of jurisdictions have systems in place to share customer information between operators, in the vast majority of countries operators are solely reliant on their own data to make informed decisions.
“If you look at bank transaction data, the highly involved gamblers are gambling with three, four, five, maybe even six operators,” said Kasra Ghaharian, director of research at the International Gaming Institute at the University of Nevada, Las Vegas.
“How are you actually getting a decent robust risk profile of a person if you’re only going to look at a single operator? That’s one of the largest benefits of open banking data,” he said, speaking at iGB L!ve in London, earlier this month.
The Need To Eliminate Friction
However, open banking’s achilles heel may be that it cannot be accomplished without some friction.
Regulations in the EU, the UK and elsewhere are very clear about requiring approval from the customer before any checks can take place.
It’s also forbidden to buy consent checks in terms and conditions. Open Banking Limited, which runs the UK’s open banking standard, says in its guidance that “it is essential that customers are clearly informed about the consent they are providing and the service they are receiving”.
That rules it out of initiatives like the UK’s financial risk assessments, which the white paper that spawned them says should be accomplished with at least 80% of the time without the customer experiencing any friction in their user journey.
However, open banking enthusiasts still believe that the technology can help to keep vulnerable customers from fleeing to the black market.
“There’s been a sea change in the past 18 months around consumers' attitudes to doing this,” explained Charles Cohen, CEO of KYC company Department of Trust.
“Whereas a couple of years ago it was really quite difficult to get people to consent to open banking, we [now] have operators getting 95 percent acceptance. They’ve just refined the process and refined the journey,” he said, also speaking at iGB L!ve.
However experts still foresee some issues with convincing customers to permit open banking checks to happen, given that consumer trust in gambling operators tends to be low.
Gambling customers find it “unnerving” to be asked for their open banking consent and often don’t believe assurances that the information they are giving up won’t be used for marketing purposes, said Ghaharian.
“There has to be something in it for the player” to convince them to agree, said Simon Forster, from credit reference agency Experian.
Whether it be an excess of friction or skittishness about handing over the keys to your financial history, Cohen’s view of the future is an optimistic one, in which these concerns melt away over time.
“Open banking will just become the norm,” he predicted. “Players will just expect it and they won’t care about it.”
Except, the experts agreed, in the US, where attitudes to controls on consumer spending face more cultural barriers that could take many years to overcome.
