Mar 20, 2018

Open Banking: is anyone outside of finance aware?

The revised Payment Services Directive (PSD2) and Open Banking were officially launched on 13 January 2018. The Open Banking initiative gives third parties (such as fintechs and tech companies) access to data held by the main retail banks. This promises to revolutionise the finance industry and give consumers more access and control over their finances. However, recent research points out that the majority of UK consumers are in the dark about it. Why could that be?

 

crowd public unaware open banking

 

Almost 60% of public is unaware

New research by YouGov, who surveyed 4,458 British adults on behalf of the challenger bank CYBG, points out that only 6% of adults know exactly what Open Banking means, while 58% are unaware of the initiative. More strikingly, over 75% of the people surveyed say that they are unlikely to use Open Banking, with the research suggesting that people are three times more likely to trust a financial services provider, rather than third-party providers.

The main concerns are:

  • Data falling into the wrong hands (31%)
  • Invasion of privacy (19%)
  • Finances not sufficiently complicated to benefit from the service (18%).

Is Open Banking really unsafe?

First of all, third parties will have access to consumers’ accounts through Open Banking only if the consumer consents for their data to be shared. Just like the banks and financial services, third parties will still be regulated by the FCA (in the UK). If consumers are worried that a third party does not look legitimate, then a check should be done to make sure it is regulated by the FCA. It is vital that data is shared with trusted and regulated companies.

Don’t want to share your data?

If a consumer is not feeling fully confident regarding a third party organisation, then they have the option to disallow their data to be shared. Under GDPR, consumers will also be allowed (depending on circumstances) to have any data a company holds about them to be fully erased.

 

laptop consumer open banking unaware

 

It is important, however, to point out that finance systems work on data. Without it, payments could not be processed and consumers would not be able to access Internet Banking, pay by credit/debit card, pay via a smartphone app or withdraw cash from ATMs.

Open Banking is still in its infancy

Open Banking has only been recently launched. Once consumers fully understand the ease and convenience of having all their bank accounts and bills in one place, opinions will most probably change. As long as Open Banking is fully regulated and GDPR compliant, privacy or data sharing worries should hopefully decrease.

 

Read our CIO’s article on PaymentEye about the six ways our lives will change with Open Banking.

Get in touch with SmartDebit to talk Direct Debit. We help organisations and businesses of all sizes to reduce customer churn and fees, and improve reporting.

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