LONDON – A new study conducted by Network Research shows that Open Banking has the potential to revolutionise the way consumers handle money, but more needs to be done by emerging fintech businesses to establish trust.
This trust issue bodes well however for the more established banks and financial companies who have a good reputation amongst consumers.
Since May 2018, the study has tracked a nationally representative sample of 500 UK consumers monthly to monitor levels of awareness toward Open Banking and reveal actual and potential usage. The study found:
- 58% of consumers would consider themselves fairly likely to try new financial services to improve their finances. 34% said they’d be willing to try a service that reduces their work in comparing different financial products and services and recommends providers to save money and meet and exceed financial goals.
- Just over a third of UK consumers are aware of Open Banking. Younger consumers aged 18-34 are significantly more likely to be aware than those who are aged 55+.
- Almost half of 18-34 year olds indicate their likelihood to try Open Banking services in the near future. This response is a lot milder from 35-44 year olds and those aged 55+.
- The research shows varying degrees of consumer interest in different types of Open Banking apps from ones that simply allow aggregation of accounts through to services that would actively recommend financial products or move money between different accounts to ensure a better financial return.
- Banks/financial companies are seen to be trusted more than technology companies or fintech businesses to provide Open Banking applications.
- As Open Banking is fairly new, it is no surprise that only around 1 in 50 have started using third party applications. The majority (over 4 in 5) found the sign-up process easy and all users say they find the Open Banking services they have signed up to be ‘valuable’ (albeit to varying degrees).
- Security of money (likely fraud through 3rd party data sharing) and general concern about safety of personal data & associated risks are seen as key barriers amongst those who are cold to Open Banking.
- Although almost three-quarters of consumers currently use a tablet, PC or laptop for the day to day management of their bank accounts, only just over a quarter said they access accounts using an online app on a smartphone or tablet.
Open Banking is clearly growing in the UK and these results suggest that Open Banking will one day revolutionise the way we manage personal finances, although it’s unknown how fast this process may take. Emerging fintech companies should look into speeding up this process by proving their reliability to consumers. They should work to reduce risk of fraud and secure personal data which will ultimately lead to gaining consumers’ trust.
More about Open Banking & Network Research
The nine largest UK retail banks and building societies – Barclays plc, Lloyds Banking Group plc, Santander, Danske, HSBC, RBS, BoI, Nationwide and AIBG – have a legal requirement to allow certain information to be shared securely online with other regulated companies through Open Banking, providing customer permission is given.
Open Banking is set to fundamentally change the way consumers interact and control their finances. Network Research’s new product, Open, will look to support the financial and retail banker sectors through this change by allowing them to track perceptions and attitudes to Open Banking with data provided through engaging visual charts or downloaded raw data. A total of five major financial services brands (including three of the big banks named above) have agreed to participate in this research project until April next year.
Richard Gaze, Client Director at Network Research said of the new offering, “Open Banking is the latest innovation that is changing the landscape of the financial sector. Open will allow traditional retail banks, savings and investment providers and fintechs to understand the changing attitudes of consumers alongside this revolutionary trend and allow them to react quickly to public perception. The data is combined with consultancy from our own financial experts to ensure that clients won’t miss a thing”.