How telco and utility companies are using open banking to navigate economic uncertainty
With the cost-of-living crisis and surging energy prices, customers are switching to telco and utility providers who are able to offer them the most value and best experience for the lowest price. For some providers, it’s an opportunity to stand out. Open banking can help boost loyalty, protect vulnerable customers, and remove payment friction.
The cost-of-living crisis is putting businesses under ever greater pressure to protect and retain their customers.
Open banking represents a great opportunity for telco and utility companies to improve the customer experience.
Onboarding, affordability checks, and payments are all key use cases that Tink solves.
One of the principal benefits of open banking is that it enables businesses to connect seamlessly to their customers’ bank accounts – making it easier for customers to onboard, pay, and securely share their financial data.
Tink currently works with some of the largest telco and utility providers in Europe, serving millions of customers, which use open banking to onboard customers quicker, assess financial vulnerability, and facilitate seamless payments. Let’s dive into how they do it.
Onboard customers quicker
Direct debit is one of the most common ways to pay your monthly phone or utility bills, but setting one up can be a friction-heavy experience prone to human error. Customers need to switch over to their bank’s app or website and paste over their details or manually enter them.
On top of this, many businesses ask customers to verify their account details before setting up a direct debit. Traditionally, this would mean making a micro-deposit or submitting a bank statement, adding extra steps to the process.
This is a prime example of where open banking can simplify the user experience and reduce unnecessary friction. Tink customers like PayPal and Billogram use Account Check to pre-populate and verify account details in real-time, enabling direct debits to be set up securely in just a few clicks. This significantly shortens the customer onboarding process, reducing churn and boosting conversion by 20% on average.
Check for customer vulnerability
Open banking gives access to real-time transaction and balance data, allowing telcos and energy suppliers to gain valuable insights into the financial situation of their customers. In these uncertain economic times, when affordability is a growing concern, businesses that can protect their most vulnerable customers from dishonour or overdraft fees are more likely to be rewarded with long-term customer loyalty.
Companies like American Express and Bank Norwegian use Tink’s Income Check to analyse customer income patterns, determining whether a consumer can afford a service and anticipating their ability to pay their bills on time. And by verifying customer balances, a feature of Account Check, businesses can even determine the best possible time to collect a direct debit payment, reducing the risk of unnecessary fees for the customer.
Bank Norwegian users can connect directly to their bank account
Enable faster payments
No one enjoys the act of paying bills, but that doesn’t mean telco and utility providers can’t make the process as painless as possible. Traditional ways of paying bills like direct debit and manual bank transfers require manual work. They can be friction-heavy for the customer, ultimately leading to increased drop-off and even missed payments.
For businesses, these payment methods come with extra operational workload and fraud and compliance concerns since there’s a requirement to store sensitive customer data. Plus, it can take up to 5 days for the funds to settle, increasing cash flow risk.
Open banking offers a simpler, more cost-effective, and more secure way to accept payments directly from consumer bank accounts. Tink customers can enable users to pay their bills or invoices instantly in just a few clicks, even paying multiple bills using bulk payments, or let them top up their accounts to pay off an outstanding balance.
Take Kivra, for example, the largest digital mailbox in the Nordics, with over 5 million users. Kivra lets its users pay their invoices directly in the app using Tink’s Payments product, with the average payment lasting less than 45 seconds. All payment details, such as the amount, reference, and recipient account are pre-filled, ensuring that the risk of human error is eliminated.
Kivra users are able to pay their invoices now or at a later date
The prevailing economic uncertainty is hard on businesses and consumers alike. Still, there are steps that forward-thinking companies can take to make life a little easier for customers while setting themselves apart. Above are just some of the ways telco and utility companies can use open banking to improve their services and retain more customers in the short term and set themselves up for continued success in the long run. If you’re interested in learning more, then get in touch.
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