Businesses onboarding lessons and technologies from other sectors is nothing new, and for an industry as interconnected with finance and technology as gaming, the cross-collaboration between these different spaces is hardly a surprise.
There is always room for more engagement and learning, however. With new payment technologies catching the attention of operators more and more, like Open Banking just to name one huge talking point, betting and fintech have never been closer.
Christian Reinheimer, Group Director of Payments Product and Technology at LeoVegas Group and a speaker at this September’s Payment Expert Summit, explains how the MGM-owned international gaming firm is working to keep itself at the forefront of payments innovation – and why this is so important for his industry as a whole.
Payment Expert: Thanks for speaking to us Christian. To start things off, do you think that In mature markets are payment methods a notable way to gain a competitive edge?
Christian Reinheimer: Absolutely, yes! Mature, regulated markets certainly have the advantage of providing more clarity on how the playing field looks when it comes to providing our customers with great experiences when depositing money and accessing their winnings. However, there is still a lot of room for interpretation, which can be the basis for innovation and provide a competitive advantage.
Our job as payment experts is to provide the most convenient yet safe customer experience, and that can be done in many different ways. The methods that appeal to our customers the most will also create the most loyal customers.
PE: What emerging payments technologies are redefining the customer journey in betting?
CR: From my perspective, it currently is artificial intelligence. But not generative AI, which is THE hot topic right now. AI for pattern detection that supports personalisation plays a far bigger role.
This personalisation can take many different forms, from knowing customer preferences without them explicitly telling you (pattern detection), to identifying risk and effectively mitigating it, and improving payment transaction success rates. All of these areas can benefit from AI.
The more effectively these areas are handled, the better customer experiences we create and the more scalable products we build. A couple of percentage points of improvement in dropped-off cashier journeys will significantly impact your top line. Anticipating preferences and only burdening risky customers with friction to keep the business and its customers safe can provide these benefits.
Apart from that, there is (slow) movement in reviewing and improving the actual networks our money is being moved on – the very infrastructure that enables payments in real-time across country borders in a safe way. Lots of opportunities, but also new challenges, come with that.
PE: There is a lot of talk around Open Banking right now. Can Open Banking revolutionise the KYC journey for operators or are other technologies going unnoticed?
CR: We have been closely involved with the Open Banking space since 2019 and are following the trends there. For us, it’s an area of strategic importance as it opened up opportunities for innovation and new products in an area that has a substantial share of payment volumes. Now, after seeing a lot of old and new providers working with the bank APIs, there are some quite sobering results, especially when it comes to data quality via the APIs exposed by the banks.
So far, I have not seen any good product that can provide a high-converting KYC solution based solely on Open Banking-sourced data. From what we see, there always needs to be a level of normalisation and data enrichment from other sources besides the Open Banking APIs, or else the products are not good enough. In this regard, it is a bit disappointing to see what came out of the PSD2 initiative, which came with a lot of hope for new solutions in the space.
PE: Can operators take any lessons on board from the financial services sectors when it comes to payments, KYC and AML compliance?
CR: I think so, yes. Many challenges faced by the financial sector are quite similar to ours in the areas of AML and KYC. Given those similarities, it is quite interesting that there isn’t more collaboration between the sectors. A casino operator acts like a bank, taking in money and paying it out.
We, just like a financial institution, have to monitor that activity to identify potentially risky behaviour, not only in the area of AML but also in RG and, of course, fraud mitigation. The methodology and technology used for that can be very similar. Quite a few providers we talk to in this area are also working with financial institutions to help them be more effective at detecting anomalies.
Given these challenges, our sectors’ interest in effectively, but with low friction, identifying a customer is also quite similar. Hence, if you sign up for a new bank account with Klarna or Revolut, the procedures there will feel quite familiar compared to what we see with gaming operators in regulated markets.
PE: How crucial is it for operators to factor payments considerations when crafting and implementing a multinational strategy?
CR: Absolutely crucial. Payments are a mix of local and global solutions with very different customer preferences, sometimes even differing within a country or specific user groups. When aiming for success with a multinational strategy, offering only cards won’t get you there.
Understanding local customer preferences and the local provider landscape is key. Providers can be very different. In some markets, it is quite time-consuming to determine which provider is actually connected to the financial system and really moving the money.
The more providers stack up, the more middlemen are added, driving up costs, reducing control, and leaving you with little impact on the product you are buying. Hence, it is worth putting in the effort to analyse the provider landscape and underlying financial networks in detail to come up with the best mix.
PE: Can we expect betting firms like LeoVegas to engage more directly with the payments sector, either through in-house development or through partnerships?
CR: This is already happening, although it seems more sporadic now. The more the industry regulates and the more regulation matures, the more interesting it will be for big players to build or buy their own solutions in certain areas.
This can be platform-driven but could also extend to financial licences and certifications. We are building our own bespoke payment gateway to serve our specific needs, and others are doing the same. But why not have an in-house Open Banking or EMI provider one day?
We will see more of this for sure as the regulated market consolidates and margins get slimmer. There will be a return of investment in owning more parts of the full technology and product stack.
PE: Expanding on this, how do you weigh up the benefits and disadvantages of third-party payments partnerships against direct integration or in-house development?
CR: In my opinion, there is no silver bullet for the build or buy decision. Where you want to go depends on a lot of factors. In-house development always needs to see an ROI, and that usually comes with the scale of business and complexity. The more a business grows, the more relevant it becomes to cut some costs by not being provider-dependent.
The same goes for innovation and control of your platform. The more complex your business gets and the more competitive the market, the higher the benefit from owning your technology. But it is important to know what you are capable of, too. It’s very easy to want to solve something with in-house development, but having the expertise to do so is a different topic. Often, it makes sense to partner with someone who has such expertise in the beginning, learn, grow, and slowly move from external to in-house over time.
PE: Thanks for taking the time to speak with us, Christian. To round things up, do you think the inclusion of a dedicated Payment Expert event in Lisbon is indicative of the growing importance of payments to the global gaming sector?
CR: I do think so, yes. I’ve been in this industry for only five years, but every year the relevance of Payments has increased. You can see it at industry events, with more and more providers exhibiting and, of course, additional panels geared towards the topic.
You can also feel it from the growing payments teams on the operator side. The relevance has increased along with the expertise, too. Many Payments professionals from PSPs have joined operators to inject their knowledge into this industry, which is great to see as we level up our game.
The Payment Expert Summit, part of the upcoming SBC Summit, will be held at the Feira Internacional de Lisboa from September 25-26. Secure your spot with the Early Bird ticket offer, which provides access to all three core days of the event, including the exhibition floor, conference sessions, and evening networking parties, all for the discounted price of just €400.