Despite the launch of Open Banking in 2018, new research suggests consumers need more education on the subject, with nearly 58% of people not knowing what Open Banking is.
Whilst the new regime went live in January, new research by YouGov, surveying 4,458 British adults on behalf of the challenger bank, CYBG, provides a stark view of consumers’ lack of knowledge about Open Banking and high levels of anxiety around security and privacy issues. The findings highlight the industry’s need to do more to earn the public’s trust if Open Banking is going to work.
The research found that only 6% know exactly what Open Banking means, but over half of respondents (58%) said they were simply unaware of the initiative, despite it being regarded as a major shake-up to the banking industry.
Over 75 per cent of people say they are “unlikely” to use Open Banking service and the majority are ‘not excited’ about the scheme (81%), despite independent surveys showing that they could save hundreds of pounds a year in lower bank charges.
Security issues are the main concern consumers have around Open Banking, for example their data falling into the wrong hands (31%). An invasion of their privacy (19%) and their finances are not sufficiently complicated to benefit from the service (18%) are also among the reasons why they are unlikely to use it.
The research suggests people are three times more likely to trust a financial services provider, such as a bank, to look after their personal and financial details than other firms or third-party providers (37% for banks vs. 11% for other firms), with 18–24 year olds having the highest level of trust in banks. More than half (52%) of this age group would trust banks to keep their personal and financial data secure.
Of the number of platforms and apps designed to take advantage of Open Banking, those provided by banks come out on top. Respondents would rather access multiple accounts through their bank’s platform (19%) than a third-party provider (3%).
However, there is some good news – 42% of people have some awareness of Open Banking, and surprisingly this number is much lower among the tech savvy 25-34 year olds (39%), compared with 45% of consumers aged 55+. This could be down to the more complex banking needs of those in this age bracket.
Debbie Crosbie, Chief Operating Officer at CYBG, said: “What’s clear from this research is the success of Open Banking is dependent on banks being able to build on existing trust and confidence with their customers. We need a real and joined-up effort on this from everyone within the industry if we are serious about bringing about a revolution for customers. Many more customers would be excited about Open Banking if it were explained how much it would benefit them financially.”
“As the UK’s leading challenger bank, we are proud to offer our customers secure, simple and smart banking. We rise to the challenge presented in this research, to persuade our customers that Open Banking is secure and will make their lives easier. We realise that banking can’t stand still and that’s why we have made a £350m investment across the Bank, including building our iB technology platform, which is Open Banking ready. iB allows us to deliver these kinds of changes to customers faster and more efficiently than ever before – giving customers greater choice and convenience with their banking.”
“Our intuitive, mobile app-based banking service B, continues to go from strength to strength – we now have over 150,000 B customers and we are currently working on a number of hugely exciting developments that will further help to revolutionise the service we give our customers.”