Security boosts open finance adoption among UK consumers, research finds

Consumers feel most assured of security when trusted financial institutions are involved

by | July 7, 2022 | bobsguide

UK consumers would be willing to use open finance apps if they felt assured of their security, according to the Open Finance report published in July by The Investing and Saving Alliance (TISA) and EY.

The report showed that 94% of respondents were willing to use open finance solutions under such a scenario.

Consumers felt more assured in using a solution if trusted financial institutions were involved.

The report also revealed that over 90% of participants were open to using a digital dashboard to get a consolidated view of their total pensions, savings, and investment.

“Consumers will be able to easily and securely view their financial position by drawing data from multiple providers enabling them to take more control of their finances,” Harry Weber Brown, chief executive at TISA Digital.

“But we should be clear about the barriers to creating a world-class Open Finance ecology. The security of private data must be assured, and significant investment made into designing user-friendly and open APIs. Core principles for any Open Finance solutions must consider affordability, particularly to ensure accessibility for smaller members, a fair allocation of costs and the capacity for ongoing development.”

According to the report, customers with access to all the information they need are almost 10 times more likely to switch to better-value deals, including open banking tools and data-driven technological solutions, when offered.

Recommendation of a governance model for open finance

The report also emphasises the need for several governance bodies, separate from open banking, to set standards and perform critical functions in the open finance industry.

It suggests an umbrella structure where all the entities would fall under the Smart Data function, which would then provide “a foundation of interoperability to support bodies for open insurance, open savings, investments and pensions, among others.”

Open finance gets regulatory and financial institutions’ attention

TISA and EY’s latest report comes two days after the European Commission-led consultation about open banking ended.

The consultation will look at the application and impact of PSD2, the directive that enabled the proliferation of open finance, to determine whether additional actions need to be taken.

Beyond the governing bodies, financial institutions have also been seeking out partnerships to strengthen their security.

Last month, Canadian FI, RBC, partnered with data aggregation and analytics platform Yodlee to enable data sharing between the bank’s clients and the latter’s third-party applications.

UK bank TSB and Polish peer Bank Millennium also partnered with UK real identity platform provider Onfido this year to utilise the latter’s identity verification technology.

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