NatWest Group has never seen Open Banking as a purely regulatory, mandatory initiative. We’ve always seen it as an opportunity to promote innovation within the industry. We have always asked ourselves how we could move beyond the regulatory mandate and use new technologies to benefit our customers. 

That same approach inspired the development of Variable Recurring Payments (VRP). We are the first UK bank to go further than the CMA mandate requiring banks to provide VRP in support of sweeping (the automatic transfer of money between two accounts belonging to the same person). So as the other eight banks in the CMA9 introduce sweeping, NatWest’s VRP offering is already going above and beyond this regulatory requirement to create the first non-sweeping VRP – offering VRP as a new and convenient payment option for businesses and consumers.

NatWest Group has a vital role to play in supporting the customers and communities we serve at key stages throughout their lives – whether it’s helping to buy a house, save for the future, or set up and grow a business. We are always thinking about how we can serve our customers better,  including how they make and receive payments. And that is why we introduced VRP – to improve the customer experience and address common pain points.  

What Are The Benefits of VRP? 

With VRP, there is no one feature that everyone has been waiting for, but several small things to which customers will gradually become accustomed and of which they’ll realise the benefits over time. 

VRPs address many issues with traditional payments. They are account-to-account, which means that merchants benefit from instant settlement, as well as not having to store any customer data that could be compromised. And, because VRPs are set up digitally, there’s no paperwork involved, saving time and reducing the risk of fraud and manual error. 

VRPs are great for consumers, too, and enable much better control of outgoings. Customers can easily set up regular payments through their bank app or cancel them altogether – all with the tap of a button. Customers will also receive a notification when a payment goes out and can set upper limits for payments, which mitigates the fraud risk.

There are many potential use cases which demonstrate the power of VRP. Charities, for example, can now use VRP to let people set up donations and then top up payments easily without needing to reauthenticate. There are many other use cases in e-commerce, debt repayment and more. The VRP opportunity is quite broad. It can be an alternative to everything from standing orders and Direct Debits to e-commerce and card-on-file payments. 

API Innovation

Ever since the genesis of Open Banking, NatWest made the call to put the team that develops Open Banking into its innovation department. Typically, our peers hosted similar teams within technology or other departments. We built our APIs and API infrastructure to a very high standard, which means the technology is almost infinitely reusable. 

From day one, we aimed to build the APIs as generically as possible to promote wide-scale reuse across the bank. Take the app Housemate, for example, which allows users to split bills. It reuses an API we originally built for Open Banking, which enabled Housemate to get to market quicker. Another example is Rooster Money, a family pocket money app and card for kids, which uses one of our APIs to enable NatWest customers to open Rooster Money accounts very quickly. API connectivity means customers do not have to resubscribe to Rooster Money, as it can access customer data via the API. 

Rather than just building APIs to meet the regulatory mandate, we want to see maximum API reusage within the bank. There are now over 60 technologies around the bank that are powered by the APIs we originally built in response to Open Banking. 

In addition, we are always very keen to listen to feedback from third parties and have gone above and beyond to build good relationships with Account Information Service Providers (AISPs) and Payment Initiation Service Providers (PISPs). We’ve worked hard to understand their feedback and decide what we can do for them. First, we work with them to ensure that we’re meeting all regulatory requirements. Then we determine how we can take the next step to do much more for our customers.

Why Did NatWest Decide To Become a VRP Leader?

There is no first-mover advantage in terms of grabbing market share. So that is not why we are working on VRP. We want to be one of the most innovative big banks and I think this reinforces that mission. When we talk to commercial and corporate clients, they see us pushing these boundaries. Hopefully, that positions us as an organisation that is really delivering new features and services that will help our customers thrive. Ultimately, we are also very excited about Open Banking. We want it to be a success.

By the end of next year, we would like to see full market coverage for VRP.  If every bank tried to move at the same speed, the industry would change slowly. Sometimes you do have to move together, adopt identical standards and set big launch dates when new technology goes live. For VRP, we saw the best way forward was just getting to market and proving that our customers gain value.

At this stage, the industry should focus on awareness. We expect to see other banks build their own VRP propositions one by one, hopefully starting from the end of this year. There is no regulatory push and no big launch date like there was with Open Banking in 2018, so we must work hard to inform customers of the benefits of VRP and ensure they stand out on checkout pages which are also quite crowded already with Buy Now Pay Later options, mobile wallets and other types of payments. 

How do we get across the benefits of VRP when we’re effectively starting from zero in terms of product awareness? This is a challenge we need to be patient with. Right now, NatWest is moving ahead unilaterally without knowing what our peers’ plans are, so the pace of adoption is unknown. Today, we are innovating beyond the mandate. Once our peers launch their propositions, we will see increased adoption. The next few years will see a lot of development in VRP and it will be nice to know that NatWest was there at the start. 

Author: Kevin Dearing, Head of API Ecosystem at NatWest.

Helen Child, Founder & CEO, Open Banking Excellence