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TECH TALK


Step change


Open Banking is set to redefine banking. How will that affect business travel?


world. Aren’t banks more, well, closed? Not any more; the Open Banking guidelines became law in January, as part of the EU’s Payment Services Directive 2 (PSD2), and ushered in a new set of open API (application programming interface) standards for most of the UK’s major banks (see panel, p29). Overall, Open Banking does two things:


O


it lets bank customers and businesses share their bank account data securely with third parties, and it encourages innovation. Previously, the UK’s Competition and


Markets Authority (CMA) argued that larger banks did not have to compete hard enough for customers’ business and, in consequence, innovation for smaller financial services providers was stifled. As Victor Trokoudes, chief executive of


money-saving app Plum, says: “For too long, banks have been guarding customer data instead of using it in a way that benefits them. In fact, banks in the UK have been so defensive that most of them had clauses in their T&Cs that prevented people from sharing their data.” The resulting innovation stands to


impact the business travel sector, according to Daniel Greaves, senior marketing manager, payments, at Amadeus. “Open Banking will encourage the entry of new players into the space… and more products on to the market,” he says.


EXPENSE SOLUTIONS A new wave of ‘added value’ providers can now tap into the growing trend of digital payments as they seek to better interpret our transactional history and data, and shake up the way we pay digitally. “Today, there are more than 235 different methods


28 BBT March/April 2018


PEN BANKING – TWO WORDS most people would not expect to see next to one another in relation to the financial


of payment – some are cards, but a lot are PISs [payment initiation services]. Rather than type in your 16-digit card number, PISs make it smoother than a credit card experience,” says Greaves. Meanwhile, the earlier Interchange


Fee Regulation (IFR) led to multilateral interchange fee (MIF) caps, which effectively lowered the interchange fee (the fee paid between banks for the acceptance of card-based transactions). This has meant personal credit cards being used on business trips now have fewer perks and shorter interest-free periods. As a result, companies will increasingly provide staff with corporate cards. Open Banking will now “shift the balance towards centralised spending”. “Think about the business travel experience today,” Greaves continues. “The flight is paid for by the employer, but the hotel by myself, plus other on-trip expenses. I can be out of pocket, and there is the time spent doing expenses. With more digital, centrally made transactions, the traveller benefits with better control, better visibility on spend, incentives to keep spend on policy, and so on.” According to a recent Barclays report,


Open Banking: A Consumer Perspective, “Open Banking has the power to revolutionise the way we manage our money, shop around and buy things. For SMEs, managing cashflow and receiving payments should be cheaper and easier.” However, organisations will need to


adapt. “As well as ensuring more defined pre-approval procedures are in place, another challenge TMCs and organisations face is how to integrate those services, to make them available to staff and later reconcile data,” says Greaves. “It is important TMCs look at how payment apps could improve the


“For too long, banks have been guarding customer data instead of using it in a way that benefits them”


BUYINGBUSINESSTRAVEL.COM


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