53% of UK consumers would like their bank to provide them with more opportunity and better quality services for their finances as the Open Banking initiative roll-out begins.
With the belief that consumers deserve better banking, the Emerging Payments Association (EPA), the UK's leading member association of payments industry influencers, conducted a national survey of 2,038 UK consumers on 'Fairer Banking'.
The Second Payments Services Directive (PSD2) deadline on 13th January 2018 saw just one of the Big Five UK banks compliant in time with the deadline. Even though the deadline has now passed, over half of consumers still have not heard of the initiative that has the power to change the future of all financial services.
Just 7% of consumers would choose not to have greater control over their finances via FinTechs, yet only a small number (20%) have been informed of Open Banking by their bank. There is a clear desire for new financial offerings, yet consumers are being kept in the dark – or worse, being fed misleading messages.
"Banks are reinforcing that 'You should worry about your financial information being compromised' because they want to keep control of their customers," comments Robert Courtneidge, CEO at Moorwand and EPA benefactor. "There's definitely something in it for the banks to try and keep third-party providers out of their accounts, but it's not always in the consumer interest."
The most deceptive myth surrounding Open Banking is that it will expose bank accounts to unsafe third-parties. The survey revealed that the biggest driver in any financial decision is the security of personal information; over 40% of consumers indicated that this is their primary concern when it comes to monetary matters.
Trust, however, is split across respondents, with a third (35%) happy to trust new providers, but a third (34%) cautious about regulated FinTechs accessing their information. This is despite the fact that FinTechs undergo a rigorous process to get certified by the Financial Conduct Authority (FCA). Only when they have this license can third-parties access personal information – and this is only at consumer request.
Professor of Marketing and Associate Dean of Providence College, Dan Horne, comments: "The better informed consumers are, the more likely they are to embrace new opportunities. This creates an uncomfortable situation for traditional financial service providers and helps explain why they are dragging their heels in compliance."
On 25th May this year, General Data Protection Regulation (GDPR) comes into force to give customers more control over how their personal information is used. Consumers aware of GDPR are twice as likely to get involved in Open Banking than those unaware of the regulation and the greater control it will give them over their data.
Tony Craddock, Director General of the Emerging Payments Association, added: "Open Banking is closed in all but name. More must be done to explain what Open Banking means. Once people understand that their privacy is protected and access to new services is secure, many will use the new non-bank service providers enabled under PSD2."
This suggests that there's a clear appetite for Open Banking once awareness and trust grows. Banks need to embrace the initiative and communicate its benefits – the ones that get there first stand to profit from innovative services that truly meet the demands of the modern banking customer. If banks don't come on board, consumers are more likely to turn elsewhere to receive the numerous benefits arising from FinTech innovations.