Research by CREALOGIX Group, provider of mobile banking solutions, has revealed that 46 per cent of the consumers are concerned about the security implications of Open Banking, including identity theft and data breaches. When asked whether they thought Open Banking was a good idea, 69 per cent said no, with security being their primary concern. Those that thought it was a good idea said they believed it would help them budget better, switch banks more easily and see their family’s finances. The study of 2,000 consumers across the UK illustrates that Open Banking faces a perception issue that needs addressing for wide scale adoption.
The research showed that younger, digital native, respondents were less concerned about security and protecting their data with only 28 per cent of 16 – 34 year olds expressing this fear, versus 64 per cent of the over 55s.
The EU regulation, PSD2 sees the start of Open Banking and requires financial service providers to provide legitimate third parties with access to their customers’ account data, and to enable them to initiate payments. The principle bank – the bank where the account is held – is obliged to create the IT basis for this in the form of APIs. As sensitive information is involved, all automated access to data is subject to strict security requirements.
Xx, Crealogix says: “PSD2 brings fundamental change to the entire banking industry, but consumers are not being informed properly about the benefits, leaving them fearful of data breaches. The regulation puts the consumer in the driving seat, providing choice and better control. It will increase the intensity of competition, ultimately leading to innovation. Traditional players who merely respond by doing the minimum necessary to become compliant will see their influence dwindle.”
The research strongly suggests that banks are doing little to communicate with the consumer as 85 per cent of consumers have either never heard of, or are unsure what the Open Banking initiative is and how it will affect them. This is despite the Financial Conduct Authority (FCA) ordering nine of the country’s biggest banks – several of which missed the 13 January launch – to open up the information they hold so that it can be used to create new banking products and services.
In addition to only one-in-six (14.3 per cent) being aware of the Open Banking initiative, less than a quarter (22.8 per cent) of respondents had heard about it directly from their own bank or building society.
CREALOGIX is a fintech top 100 firm and a global market leader in digital banking. Its fintech solutions offer bank clients a better customer experience, greater security and effortless online money management. The CREALOGIX product and service range spans the areas of Digital Banking, Digital Payment and Digital Learning.