Confidence in service providers critical to open banking adoption – study

7 noiembrie 2019

Survey confirms that banks are preferred suppliers of open banking services, but must fight to maintain position as TPPs evolve the category.

The overwhelming majority of consumers would prefer their main bank, as opposed to other banks or third-party providers (TPPs), to be their primary source of open banking services, a new pan-European study from Mobey Forum and Aite Group has revealed.

The report, entitled Open Banking: Open Minds? Consumer appetites for open banking services’, draws on a online quantitative survey of over 1000 consumers in Finland, France, Germany, Spain, and the United Kingdom. Conducted in June 2019 by Aite Group, the survey highlights the opportunity for banks to create new open banking services and emphasises that the window during which consumers are hesitant to share account data with other banks and TPPs will close as the category quickly evolves.

“It’s crucial that banks act on their short-term advantage quickly to avoid disintermediation by TPPs as the open banking market evolves,” comments Elina Mattila, Executive Director, Mobey Forum.

“Consumers trust their banks because no-one else does data security and privacy like they do – it’s a cornerstone of their success. Consumer confidence in third party banking services, however, continues to grow. Open banking is the next chapter in the digitalisation story and a new generation of agile, specialist TPPs is forming to capitalise on API-based payment and data services. If banks want to protect their place at the forefront of the industry they need to act now, either to offer TPP services under their own brands, or to create their own. Either way, they need to move before the TPPs can establish an independent base.”

According to the survey data, the number of consumers using account aggregation services remains between 0 and 2% in all the countries surveyed (figure 1). There is, however, a healthy level of interest in the service; 72% were at least moderately interested and 32% extremely or very interested in seeing their account information in one place.

Despite open banking’s infancy, the study reveals that already approximately one third of consumers are either ‘very interested’ or ‘extremely interested’ in five open banking enabled use-cases: account information services (32%), pay by bank (33%), purchase financing (25%), product comparison (35%), and identity check (35%).

Looking at the number of bank accounts respondents have and the level of interest in Account Information Services, those with more banking relationships are more interested in account aggregation services, as could be expected. Somewhat surprising was, however, that the level of interest was only 13 percentage points higher: 26% of those with only one banking relationship were extremely or very interested in the service and 39% of those with more than one bank account were extremely or very interested in the service.

These results were largely consistent across all the five countries surveyed, with some small differences: in Spain and France those with more banking relationships were slightly more interested in account aggregation, while those in Germany and Finland with more banking relationships were slightly less interested in account aggregation that the average for all countries.

Security and privacy, however, are cited as the main factors inhibiting adoption among those consumers expressing concerns. The report contends that banks should pay strong attention to these differentiating factors when launching open banking services, as competition for consumer trust increases.

The data also shows that those consumers that actively use their mobile banking apps or access their account information online, are more interested in account aggregation services. When looking at all the countries surveyed, 40% of those that access their banking information daily are extremely or very interested in account aggregation services, compared to 30% of those who access accounts weekly and 26% of those that access their accounts monthly.

The report also explores under which circumstances consumers might be willing to deprioritise trust and, instead, favour convenience and usability. When questioned over their willingness to adopt a new payment method, for example, 91% respondents indicated that they could be tempted to switch either by financial incentives or the promise of greater convenience.

The main reasons for lack of interest in aggregation services appear to be consumers’ concern about the security of their personal information and their hesitance to share that information with nonbank providers. Almost half of the respondents who were not interested in the service cited security and reluctance to share their data with other providers as the main reasons for lack of interest.

“Trust alone is not enough,” adds Mario Brkic, co-chair of Mobey Forum’s Open Banking Expert Group, George Labs. “Banks must also focus on developing services with convenience and usability in mind. People are already willing to give huge amounts of their personal and financial information to brands like Google, Amazon, Facebook and Apple. When the services deliver real value, they are ready to share data. Many open banking TPPs can respond to consumer demand faster than traditional banks can, so the race is on. The real winners in open banking will be those that can provide superior customer experiences under a trusted brand.”

The good news from the bank perspective is that consumers who are interested in using the service strongly prefer that service to be delivered by their main bank rather than another bank or a third party. This is not a surprising finding as the main bank’s app/online bank is where consumers are used to handling their finances. This result is consistent across all five countries included in the survey. It appears that banks are in pole position to offer such new services.

Open Banking: Open Minds? Consumer appetites for open banking services provides banks and other financial services stakeholders with a market view on consumer appetites toward new open banking services and explores the possible roadblocks to consumer adoption.

Mobey Forum is the global industry association empowering banks and other financial institutions to shape the future of digital financial services.

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