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It has been three years since the introduction of Open Banking legislation, which consists of a series of reforms designed to bring more competition and innovation to the financial services landscape, with the broader ambition of creating new products and services for consumers.
As we reach this anniversary, new research commissioned by American Expressin partnership with YouGov* reveals that 2021 looks to be the year Open Banking is set to go mainstream, as consumers indicate readiness to embrace the benefits of Open Banking payment products. Many UK consumers have already made the leap – 41% say they have used an Open Banking payment in the past six months or would be open to doing so in the next twelve.
Furthermore, as a result of the Covid-19 pandemic, we have all been forced to shop differently and have spent more time - and more money - online than ever before. ONS statistics reveal that online shopping accounted for 36% of all retail in November 2020, compared to just 21% the year before, in November 2019. As a result of this increased time spent online, our research found a strong appetite for using new digital payment forms, with a third of consumers in our study stating they feel confident trying new ways to pay online, including the use of Open Banking powered payments.
However, this enthusiasm is tempered with a degree of caution, as 51% of consumers said that concerns about an unknown brand or provider might prevent them from trying a new way to pay. Almost half (48%) highlight the importance of checking whether a service is verified by a payment or bank regulator for peace of mind.
There are several factors that consumers note would encourage them to consider trying an Open Banking payment method and these are focused on a frictionless experience. Ease of use (34%), convenience (30%) and speed (21%) are all key in helping to win over would-be Open Banking payment users. It’s clear that increasingly digitally savvy Brits have growing expectations around the functionality and benefits that online payment options should provide.
Another key factor contributing to this increase in demand for more choice when it comes to online payment, is challenges related to friction with online payment options and processes.
A significant 78% of consumers surveyed reported not completing a payment online due to concerns such as technical issues (reported by 44%) or having to enter unnecessary additional information such as date of birth at checkout (22%). A further one in ten (9%) report having cash flow issues as a result of delays in payments leaving their account. Such problems increase the chances that consumers will abandon the purchase or be left with a negative purchase experience.
It’s not surprising that consumers are ready for alternatives that address these pain points and take advantage of Open Banking technology.
At American Express, through our Open Banking payment solution - Pay with Bank transfer - our ambition is to see the growth of Open Banking linked products develop over the next few years as more financial services providers, merchants and consumers adopt and use the technology, resulting in an exciting wave of innovation.
Businesses must ensure they are staying on top of, and capitalising on, the latest technology to give consumers an easy and positive payment experience. 2021 looks set to be the biggest year yet for e-commerce, and getting payment technology right will lay a strong foundation to make the most of all opportunities.
*YouGov surveyed 1,013 members of the UK general public who manage their finances with online banking and have made an online purchase in the last six months. The survey was nationally representative on key demographics of age, sex, region and social grade. Fieldwork took place from 4th – 7th January 2021.