4 Ways Open Banking is Taking E-Commerce to the Next Level

15. July 2021 / in Trends, Open Banking

In the highly competitive e-commerce world, high conversion rates stand for sales growth and stability, and therefore represent a key figure that must be constantly monitored and optimised. With all the measures devised to boost conversion rates over the years, one question has been pushed into the background by many online retailers: are these even the right conversions? When speaking in terms of a profitable and sustainable business, this question is as central as it is difficult to answer.

The reality of the matter is that there is an increasing number of risks in e-commerce. E-commerce websites and online shops are facing an overwhelming workload of transactions, suspicious activity and fraud signals that they already struggle to keep up with. If you look at the recent growth of online shopping, it’s clear that this trend isn’t going to slow down anytime soon.

For security reasons, many rely on processes and systems for monitoring based on historical data, which creates false positives and turns away customers who are legitimate buyers. This not only results in a disastrous customer experience; it’s also one of the most common ways for an online retailer to lose customers.

Open Banking solutions remedy this by helping the e-commerce sector balance low risk with optimal conversions, combining the promise of a fantastic user experience with effective risk mitigation. Real-time data intelligence replaces traditional credit scores, fraud indicators and cut-offs, giving you more conversions with all-round security – while ensuring greater convenience for your customers.

These four tips will help e-commerce and online retailers to minmise e-commerce risks and reduce friction losses and purchase cancellations.

Tip One: Boost Conversions with Open Banking

First things first: increasing the conversion rate is the top priority in e-commerce. But how do you do it? Customers appreciate and expect a seamless customer experience when shopping online, which includes freedom of choice as well as shopping without additional steps and cancellations. To ensure this, you must have a logically structured website, availability of the desired products and a simple, transparent payment process. Choosing the right payment methods is absolutely crucial in this regard. Payment methods that require as few steps as possible and no additional passwords or duplicate log-ins are ideal.

However, online shop operators often shy away from simple but risky payment methods because they cannot justify the increased risk. Thanks to Open Banking, however, the risk characteristics can be checked immediately in an unbureaucratic manner after checkout with the buyer’s consent via the digital account view. Based on current account and transaction data, the retailer gets the information to fulfil the customer’s purchase request and convert more customers while still maintaining low risk.

Online shops shouldn’t only offer various payment methods; they should also strive to enable as many customers as possible to use their desired payment method. Offering the majority of customers and prospects the opportunity to pay using their preferred method significantly boosts the conversion rate. In this context, giving customers a second chance has a particularly strong impact on the conversion rate. Using intelligent data analysis, online shop operators can offer the payment method of their choice even to customers who would be or have been rejected in classic credit checks. The data analysis with up-to-date scoring is seamlessly integrated into the checkout process and authorised by customers.

Incidentally, the most popular payment method in the DACH religion is purchase on account. This is particularly desirable in online retail because customers want to see, try out or test the goods before paying, just as they would in a physical shop. However, since invoice providers gather little knowledge about customers, apart from current purchases in the shop, they reject many customers for security reasons.

With the credit check after checkout based on the customer account view, online retailers can enable more customers to purchase on account or in installments, which has a positive impact on the customer experience. This way, online shops can offer customers their preferred payment method without incurring increased risk.

Cooperation partners make this process quick and easy to implement for online retailers. The risk experts at Experian and the technology and data specialist FinTecSystems combine digital credit checks and scoring for more conversions and less risk.


For more than 10 years now, we have been helping retailers to manage payment methods based on shopping cart levels, creditworthiness and fraud indicators as well as other risk characteristics. With Open Banking, you have the chance to convert attractive – but somewhat risky (e.g. high-value shopping carts, different delivery address) – order requests into orders and thus profitable sales.
Marc Fischer, Director Sales Development, Experian DACH

Tip Two: Secure, Seamless Process Through Open Banking

Open Banking has greatly altered the banking and financial world with radical customer centricity. In e-commerce, Open Banking adopts the same approach to process optimisation in online retail and puts customers right at the center. Automated purchase on account without manual input is an example that is hard to beat in terms of smoothness. However, automated purchase on account offers more than just a great user experience.

Traditional purchase on account is currently one of the most expensive payment methods. Unsecured purchase on account carries a high risk of non-payment, which for online retailers equates to additional fees as well as loss of inventory and services. Pre-populated fields with all relevant information result in fewer abandoned purchases and a higher conversion rate. What’s more, common errors associated with manual data entry are eliminated. As a result, automating purchase on account is not only the most customer-friendly; it’s also the safest option for online shop operators.

Tip Three: Open Banking Solves Breaking Points in the Checkout Process

Your customer has decided to buy and suddenly gets an error message during checkout? The purchase is supposed to be a gift, yet it was denied because the shipping and billing address are different. This makes for a disastrous buying experience for customers and represents lost revenue for the retailer.

Unfortunately, these situations are not uncommon in e-commerce. High-value shopping carts in particular are often rejected. Alternative addresses, including packing stations, aren’t accepted. Problems with the customer’s address arise simply because the old address is still stored in the historical data. The purchase is cancelled and the online retailer loses the chance to generate a high amount of revenue. These cases are triggered by a fraud prevention strategy that doesn’t work well enough in individual cases.

Customers who aren’t allowed to purchase on account because of the supposed increased risk are forced to choose another payment method or make an advance payment. For many online shop operators, advance payment sounds tempting at first because it’s considered low-risk and inexpensive. In reality, however, it usually means blocked inventory for days and is one of the most expensive payment methods when total costs are taken into account.

How can Open Banking help retailers overcome these hurdles in e-commerce? Intelligent data analysis enables fraud prevention based on highly relevant risk factors and real-time data to provide a comprehensive, up-to-date risk assessment. Thanks to the instant view of the customer’s online banking account, online shop operators can facilitate many cases and not lose customers at checkout – without incurring any risk at all. In turn, the customer’s shopping wishes are fulfilled, even though the initial indicators were against allowing them to purchase on account. 

Tip Four: Valuable Customer Insights Through Open Banking

Chargebacks aren’t necessarily the result of criminal fraud. It’s often the case that a legitimate customer has accidentally entered incorrect payment data or the customer’s account was simply not funded when the debit was made. This is precisely the time when no retailer wants to confront its customers with accusations of fraud. In any case, chargebacks are costly and require an inordinate amount of time and money to resolve.

With Open Banking, retailers can obtain real-time information on the customer’s financial situation, including data on account coverage, chargebacks, shopping behaviour and the number of days they’ve been in their overdraft. In addition to a real-time credit check, data analysis can even be used to determine the best time to collect direct debits from customers. This means you can bid farewell to returned direct debits while customers don’t shop beyond their budget, which helps to prevent payment bottlenecks and a poor credit rating.

CTA Whitepaper Open Banking

Schlagworte: Trends, Open Banking

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