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The vast majority of consumers (85%) are not aware of the significance of Open Banking or how it will affect them, according to research from digital banking firm Crealogix.
The Competition and Markets Authority introduced the initiative on 13 January to enable third parties to offer more personalised services to customers by accessing their banking information, with the account holder’s consent.
However, in a survey of 2,000 consumers, 85% said they did not know what Open Banking is or how it would affect them.
Security was a concern for almost half of respondents too, with 46% saying they were worried about issues such as hacks, identity theft and their data being shared without consent.
Michael Bradford, CEO of Crealogix, attributed these concerns to the banks, saying they should have done a better job of communicating to their customers what Open Banking is all about.
Particularly as just 23% of respondents said they had heard from their banks about what the Open Banking reforms entailed.
“Banks should have communicated with their customers more thoroughly regarding the Open Banking initiative. Failure to do so has caused confusion and fear,” he said.
“Yet, rather than being something to be afraid of, Open Banking should actually positively transform our relationships with our banks.”
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A number of the respondents appreciated the benefits the initiative would bring, with 31% saying they would find tracking services useful, for example. A further 19% said they would like an aggregated platform for their multiple bank accounts, while 15% liked the idea of using Open Banking to manage their money better.
Jo Howes, commercial director at Crealogix, said the initiative came at a time when technology was altering customer demands.
“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,” she said.
“The Open Banking initiative has the potential to provide a more personalised service and the ability to cover an individual’s every need in a single, secure app.”
A recent study from technology consultancy firm Accenture also found that 69% of consumers might deny third-party access to their financial information. If banks can convince their customers of the benefits of Open Banking, it could add an extra £1bn to the UK economy by driving down risk premium on bank loans.