New gambling rules will see iGaming operators turn to open banking

8 min read|Published June 27, 2023

UK Government announces tighter restrictions on the iGaming industry that will see innovators go all in on open banking to become the clear favourites.

(Is open banking the answer to UK online gambling reform?)

In April the UK government announced impending new laws that will see much tighter regulation for the iGaming industry, relating to social responsibility. As well as additional levies and restrictions, some of the changes will require iGaming firms to better understand, monitor and limit their customers' activities, risking fines or even harsher possible penalties, will follow.

These recommendations don’t come as the biggest surprise, and many would deem them necessary. The iGaming sector has completely changed since the last gambling laws were written in 2005, largely due to technology. But these new laws could mean upheaval and significant new risk for iGaming businesses who will need to prove their compliance and responsibility when dealing with customers betting online.

It also shakes up the market as we are likely to see those operators able to rapidly adapt their business and leverage technology take the lead while slow movers lag behind, facing customer and revenue loss and even hefty fines.

And that’s where open banking may just have the answer. Cited in the white paper as a potential solution to help iGaming businesses monitor affordability and set limits, open banking can also support Know Your Customer (KYC) requirements, verifying account ownership to help protect from fraud and crime.

So what exactly are the changes proposed?

The white paper covers a whole range of recommendations proposed for new law, with 17 specific proposals made, intending to solve for vulnerable and problem gambling across a variety of business models and channels. From limit-setting and promotions restrictions to new rules for sponsorship and ‘games of skill’, the review will affect the entire gambling industry, online and in person, with every aspect under scrutiny. But there’s one area that’s of particular interest to us at Tink, and that's data.

The Gambling Commission has proposed two forms of risk check:
1. Background checks to monitor for general vulnerability and affordability
2. Enhanced risk checks triggered at higher levels of spend, or for customers aged 18-24
Also proposed is mandated participation in a ‘cross-operator harm prevention system’ based on data sharing between businesses, as a way to tackle problem gambling where individuals hold accounts with multiple providers

All in play or not

So what do these proposals mean for gambling and iGaming operators? It will almost certainly mean more investment. There will clearly be a need to implement process, procedure and technology to support new business operations and customer onboarding models, which are likely to have a lot more in common with those of the financial services industry than they do today.

Likely to be of most immediate concern to iGaming operators is the impact changes will have on conversion and revenue. More friction in onboarding, and more limitations on business, will of course take its toll on profits.

But the changes may not be as harsh as they seem if operators can adapt quickly. With open banking named in the white paper as a way to assess and monitor customer affordability and compliance risk, operators have the opportunity to build a much greater resource of data-driven insight so able to measure and respond to the market accordingly.

Double down on data-driven solutions

Open banking is fast becoming a central solution for technical advancement with financial services and banking sectors the first to adopt. Enabled by the rise in mobile app development and usage, there are several overall benefits that make it the optimal solution for iGaming operators.

First, its seamless UX. While you may think of traditional affordability checks as labour-intensive, manual and prone to error, with Tink, checks are processed in seconds. Tink’s mobile SDK supports app-to-app connections meaning data is fetched seamlessly, with no redirects, frictionless flows and better conversion, so potential friction at this point is avoided, for a superior UX.
Second, security. Built-in mobile verification means users verify themselves using their phone’s biometrics or password protection, connecting to their banking app - making it not only seamless but also secure, so removing vulnerability to fraud.
And of course, it's fast. Speed is important in any digital journey to maximise potential, and iGaming is no different. With Tink, fields can be pre-filled and permissions built in, removing the need for users to manually input account information, a known blocker to conversion.

Open banking nailed on with Tink

As a leader in open banking technology with over a decade of experience, Tink has built a proprietary platform to support innovation through data. With over 3000 bank connections, a suite of SDK’s and a full complement of data and tools, Tink offers data solutions to support income, affordability and risk decisioning for fast and accurate digital customer flows.

With Income Check and Expense Check, cleaned and categorised transactions data is enriched to support process and decision making based on past behaviours, letting iGaming operators set reasonable limits based on affordability.

Tink’s Risk Insights product uses customer default data - a type of data that has proven predictive power over default likelihood - that can be added to risk scoring models. And Tink’s Balance Check product provides instant access to a user's current available balance.

Tink products are designed to help businesses optimise for growth making new onboarding and customer monitoring processes easy and convenient for users and businesses alike.

Mobile native for higher conversion

Our SDK’s support app-to-app connections meaning data is fetched seamlessly, with no redirects, frictionless flows and better conversion.

Uses verified data to reduce fraud

With mobile verification built in, users grant and verify data access securely using their banking security measures, reducing vulnerability to fraud.

Pre-filled data fields for fast processing

With Tink, fields can be pre-filled and permissions built in, removing the need for users to manually input account information, a known blocker to conversion.

Now at the post

The iGaming sector is probably one of the more controversial and sensitive areas of law, and tighter restrictions won’t come as a huge surprise, especially when the most recent reforms in 2005 were before the iPhone was even conceived.

Since then we’ve seen a technology and ecommerce revolution as smartphones have completely transformed the way people bet. To quote Culture Secretary Lucy Frazer: “We live in an age where people have a virtual mobile casino in their pockets. It has made gambling easier, quicker and often more fun, but when things go wrong it can see people lose thousands of pounds in a few swipes of the screen.”

Reforms will certainly impact both businesses and players, with iGaming operators forced to rapidly adapt.

To learn more about how Tink helps solve risk and affordability processing, get in touch.

CategoryGambling