UK Open Banking experience sees shift in trust
As Australia is set to introduce an Open Banking regime in 2019, a first-ever study on consumer perceptions of the framework in the UK has found a shift in trust levels.
The study by RFi Group on Consumer Reactions to Open Banking, included interviews with 2,000 consumers and 200 small-to-medium sized businesses.
The study found that there is growing consumer awareness of Open Banking but while banks are still the most trusted institutions among consumers to keep their data safe, for the first time, in the UK, younger consumers now trust Amazon and PayPal more than they trust their banks.
The aim of this research was to debunk and expel the myths and exaggerations around PSD2 and Open Banking and to provide data-driven insights, based on facts.
Adopting the view that ‘the customer is king’ in assessing consumer perceptions on Open Banking and PSD2, RFi Group’s report found that despite a growing trust on businesses like Amazon and PayPal, the concepts underpinning trust such as brand presence and longevity in financial services still provide comfort.
Interestingly these underpinning factors behind trust continue to remain as hurdles for the fintech community.
RFi Group’s research found that while fintech awareness and usage is increasing, no fintech in the UK has more than three per cent share of the market while less than 0.5 per cent of the UK consumers are currently using a fintech as their main bank.
“How consumers will behave in an Open Banking environment will be heavily influenced by who they trust and what they perceive to be secure, (and the inverse - who they don’t and what they perceive to be insecure),” the report said.
Indeed, the report found that one in six consumers are happy to share their personal data for improved products or services, while three-in-five although are not entire comfortable, importantly are open to understanding the benefits that Open Banking may bring.
In terms of broader awareness of UK’s new open data regime, 16 per cent of consumers have previously heard of Open Banking while 18 per cent of consumers were aware it had been introduced.
Furthermore, 24 per cent of consumers claimed to have a good – 6/10 – level of understanding of the terminology and what it means for them.
The report, which also deep-dives into the potential prospects and advantages for banks, challengers and fintechs, uncovered key opportunities for the sector – traditional banks and fintechs included.
The report also uncovered that consumers don’t find their every-day banking relationships overly challenging, so ultimately, the opportunity for anyone in the market is to offer new propositions, as well as tackling everyday “pain points”.
Services that enable consumers to avoid or reduce fees tested well, highlighting that services need to focus on consumer pain points (of which fees is one).
The report also found that one in three consumers find aggregation services appealing. The report certainly uncovers opportunity for those willing to get involved.