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Considering it was heralded as one of the biggest revolutions in retail banking of recent times, consumer awareness of open banking remains disappointingly low in the UK. In new research conducted by CREALOGIX, two thirds of the 2,000 respondents questioned had no idea what open banking was or is. Furthermore, less than 8% of respondents regarded open banking as a good idea, and two thirds expressed concerns about privacy, data loss, or fraud due to open banking.
This lack of awareness is probably because nobody has taken central responsibility for it.
Open banking as an industry movement grew up from the forward-thinking ideals of the open data movement, with the support of central banks and regulators who were seeking better transparency and a more even playing field after the 2008 financial crisis.
When legislators set out to create a standard European baseline for data interoperability under PSD2, their ideals were similarly focused on the public good: more choice for customers, avoid anti-competitive practices, and create a diverse and dynamic market in which the range and quality of services available to consumers could flourish.
These things are what make open banking truly a fantastic direction for our industry to be moving in, but nobody took it on themselves to inform the people we are doing this for: the ordinary consumers of retail banking and payments.
It seems consumer open banking awareness is more of a word-of-mouth affair than an EU-wide orchestrated PR effort.
In the UK we have had an unnecessarily confusing situation of a regulator-appointed body and their technical standards being named “Open Banking”, even though their mandate is not the whole UK banking and payments industry.
The main focus of the Open Banking Implementation Entity (OBIE) has been specifically on the nine largest high street banks (the CMA9). Most of the news has been exclusively concerned with this definition. I doubt any customer of the CMA9 banks would be able to confidently explain the difference between “Open Banking” capitalised and “open banking” in general.
Every other financial institution in the UK also needs to work on delivering or responding to open banking, but don’t have to work to the plans or standards of OBIE, if they don’t want to.
Open banking as a European and indeed global movement has a number of consistent themes, intentions, and benefits running through it, but there is no single formal scope for it, and no single organisation owns the job of explaining it to consumers. It’s not clear what could have been done about this, and in any case it’s too late now.
Greater consumer awareness would be a good thing, especially if end users could be educated about their rights and responsibilities around safeguarding private data. But none of that will be necessary if the new apps or features are self-explanatory.
In our UK consumer research, the same respondents who said they were unaware of open banking were keen to get access to the new mobile/digital banking features that open banking promises to deliver. Gen-Zs and millennials are almost twice as likely to try out new open-banking-enabled features compared to the over 54s. It’s these growth demographics of demanding, digitally-savvy banking consumers that are going to drive demand and opportunity in open banking.
In short, the consumer in the open banking era won’t want to pause for education. They want more convenient, smarter money management and they want it now. And if they can’t get it now from their current bank, a competing challenger or fintech that does offer it is available to them just a few taps away.
Jo Howes is commercial director at CREALOGIX UK, and has been quoted in The Telegraph, This Is Money, and numerous industry publications. Howes is passionate about innovation in the increasingly fast-moving world of financial technology, and is a keen advocate of financial inclusion, customer centricity, and assisting a progressive culture at the intersection of banking and technology.
Swiss multinational banking software provider CREALOGIX works with leading global banks and wealth management firms to provide the best digital experience to their customers. The ability to deliver more innovative solutions more quickly helps CREALOGIX’s clients increase customer satisfaction and improve customer retention.
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