Majority of UK consumers unaware of open banking initiative and what it means for them
An independent study of 2,000 consumers commissioned by CREALOGIX Group, the provider of Digital banking solutions, has revealed that over 85 per cent of consumers have either never heard of, or are unsure what the Open Banking initiative is and how it will affect them.
This is despite the Financial Conduct Authority (FCA) ordering nine of the country’s biggest banks – several of which missed the 13 January launch – to open up the information they hold so that it can be used to create new banking products and services.
Born out of the EU-wide Second Payment Services Directive (PSD2), the Open Banking initiative was implemented by the FCA to promote greater competition and allow the creation of new solutions; bringing the UK banking industry firmly into the 21st century. The result will inevitably see banks shifting from being a one-stop-shop, locking customers into own-brand services, to allowing a more modular approach to banking.
In addition to only one-in-six (14.3 per cent) being aware of the Open Banking initiative, less than a quarter (22.8 per cent) of respondents had heard about it directly from their own bank or building society. This highlights the fact that the big nine retail banking institutions in the UK have so far failed in their duty to educate consumers about the initiative.
Due to this lack of information, there is a real concern among almost half (45.5 per cent) of those surveyed about the security aspects of Open Banking – such as personal identity threats, data breaches and unwarranted sharing of data with third party businesses.
“Banks should have communicated with their customers more thoroughly regarding the Open Banking initiative. Failure to do so has caused confusion and fear,” said Michael Bradford, CEO at CREALOGIX UK ltd. “Yet, rather than being something to be afraid of, Open Banking should actually positively transform our relationships with our banks.”
This is backed up by the research, where almost a third (31.4 per cent) admitted they would find the addition of budgeting/tracking services useful, and about one-in-five (18.5 per cent) would like to aggregate the accounts they hold with different banks into one view. Further, the benefits of being able to budget more effectively with Open Banking is an appeal to 14.8 per cent.
Banks today find themselves at a crossroads. Increasingly savvy customers expect speed, efficiency and self-enablement in every aspect of their lives. Until now, UK banks have not met these shifting expectations effectively due in part to the impact of legacy processes and systems. However, as consumers increase their engagement with a wide variety of services via smartphones and wearables – and with digital savvy challenger banks being introduced to the market – expectations will continue to increase.
The Open Banking initiative is a threat to the incumbents and will change all our relationships with our banks. Loyalty is no longer assured. Those banks that place customer experience at the heart of their operations, delivering a personalised experience that drives engagement will be the ones that survive.
“There are complex and widespread changes taking place in the financial services sector, driven by the wider digital transformation in our society as a whole. The Open Banking initiative has potential to provide, a more personalised service and the ability to cover an individual’s every need in a single secure app” Jo Howes, Commercial Director at CREALOGIX UK ltd.