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Affordability checks, aka financial risk checks, have continued to take centre stage throughout the ongoing Gambling Act Review and its accompanying consultations, but can technologies such as open banking alleviate growing concerns around the “frictionless” nature of the incoming checks? In this blog, we break down what frictionless looks like, and the challenges that come with it, with input from Sarah Fox from the , Tim Miller from , and Bahar Alaeddini of .

What does 'frictionless' mean?

Financial risk checks are in a sense nothing new. Gambling customers in Britain have long been asked to provide financial data when they have spent or lost a certain amount of money. This has undoubtedly impacted operators, as many consumers who are asked don’t continue to gamble with them. Often these are also operators' most profitable customers.

Clarity on when these financial checks are performed and what thresholds trigger them have been desired by many in the gambling industry for a long time, especially those advocating for a level playing field among licensed operators of those fearing enforcement against them for stepping out of line. But, deciding how these checks will work in reality is the subject of much debate. 

With recent clarifications by the Information Commissioner’s Office (ICO) regarding what consumer data can be shared by gambling operators and financial institutions, as well as new technological developments among credit reference agencies, open banking solutions and new application programming interfaces (APIs), the prospect of the majority of checks being largely, if not completely, “frictionless” is undoubtedly a reality.

_{Above: Sarah Fox answers 'Can you define what 'frictionless means'?}

The open banking solution

Consumers giving their consent to these open banking solutions, which are often touted as the most viable solution for frictionless checks, will provide access to an overview of their financial well-being including their income, savings, pensions, investments and debts. 

Another benefit of open banking solutions is they are typically automated and can often also cover anti-money laundering checks. This could even save operators lots of time and money. 

Adoption of open banking among British consumers is on the rise, however, adoption is not yet widespread and has been slower than originally anticipated. Around 11 percent of British consumers have become “active users” of open banking, up from around 7 percent in December 2021, according to Open Banking Limited’s October Impact report.

Additionally, open-source data already exists and is being used to help operators assess affordability for their British customer base and improve their risk assessment for customer interactions. These checks are often far less detailed than open banking checks. 

_{Above: Bahar Alaeddini explains the concerns around frictionless checks}

Could frictionless methods be discriminatory?

However, despite these technological advancements and multiple reassurances from the Gambling Commission that the checks will be frictionless for the vast majority, some in the gambling industry still fear their potential impact and “discriminatory” nature.

The horse racing industry and betting community are championing these concerns. One recent petition to stop the implementation of betting affordability/financial risk checks has received over 89,000 signatures. The UK Government responded to it by saying it is “committed to a proportionate, frictionless system of financial risk checks, to protect those at risk of harm without over-regulating.”

The government’s response is one these concerned gambling industry stakeholders have heard multiple times before. It's unlikely this additional reassurance will do much to alleviate the fears of the horse racing community, especially as a key concern is around when enhanced due diligence checks will be triggered, which are envisaged to be more intrusive. 

_{Above: Tim Miller from the Gambling Commission addresses customer consent and frictionless checks}

It seems somewhat inevitable that the checks will be introduced, however, the pressure will be on from the get-go to ensure that the underlying technologies used to run these “frictionless” checks are flawless as they will have their critics waiting en masse to point out any imperfections.

Credit reference agencies, open banking solutions, and others offering ways to solve the affordability conundrum will have to silently but efficiently tackle these long-standing concerns. Operators using these technologies must also be assured that they can trust these technologies as there is a lot to play for in the shifting UK regulatory landscape!

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Want to know more? Watch our webinar, UK Whitepaper: Defining to Future, or listen to the podcast, which was recorded on September 15, 2023. ������ϲʿ�����¼ brought together leading experts with the key decision-makers behind the consultations to discuss the impending new era of UK gambling regulation.

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