Open banking may be the talk of the financial technology (fintech) sector, but few consumers have even heard of it, never mind considered how it could help them.
According to a survey by YouGov, only 28% of UK adults are aware of open banking.
The Competition and Markets Authority’s rules for open banking in the UK mean banks have to allow third-party financial services suppliers to access customer data, if the customer agrees, through application programming interfaces (APIs).
Open banking was introduced in a bid to encourage competition through increased customer choice, by allowing, for example, payments to be initiated by third-party suppliers and account information viewed through them.
This would mean a third party could build services on top of an account and allow the consumer to use these rather than those offered by the bank. For example, customers could use money management apps that draw information from all their financial activity or find offers appropriate to them.
The YouGov findings also revealed that the younger generation – normally the first to accept innovation in banking – are less aware than older people. YouGov found that only 14% of 18- to 24-year olds had heard of open banking, compared with 39% of over-55s.
More affluent people were also found to be more aware of the regulations, which dilutes its perceived benefit of helping people get better deals and making it easier for them to manage their money.
Another barrier to take-up is nervousness about sharing data, with 77% of people concerned about allowing companies other than their main bank to access their financial data. Only 6% said they were not concerned.
Meanwhile, there is little appetite among consumers to change banking service providers. The survey found that traditional banks retain good levels of customer satisfaction, with 63% of respondents saying they were satisfied with the service they got from their current bank and were not interested in using banking services from other companies.
In a recent article revealing the findings, Matt Palframan, director financial services research at YouGov, said despite open banking being referred to as a revolution, more needed to be done to make this a reality.
“We’re seeing more of a slow and silent evolution. More needs to be done to allay consumers’ fears about data security, while financial service providers will also need to ensure that there are real benefits for consumers who are prepared to share their data in this way,” he wrote.
“It is surprising that the older generation is more aware of open banking, as we may expect a younger, more tech-savvy audience to be interested in the ground-breaking products and services,” he added. “The reality may be that true innovation is yet to take place and the products and services currently available are not really considered necessary.”