Open Banking Challenges

Emma Dalton

 

CHALLENGES AHEAD FOR BANKS ON OPEN BANKING

Debate on the future success of open banking raises important questions as to how it can be successfully delivered and communicated to customers. Selling a wide range of new banking services with benefits which are tailored to an individual’s personal circumstances is all well and good, but how many consumers will readily permit banks and companies to share their data?

 

INFORMATION IS POWER

The Open Banking Framework wishes to keep barriers to participation low, and key to its success will be helping consumers understand the value to them. Secondly (and undoubtedly pivotal) will be a requirement to highlight the confidentiality regulations to help alleviate any security concerns.

 

DIGITAL DISCLOSURE

Many of us readily input our personal details into price comparison websites and use third party providers for online payments. We use a myriad of apps which can track our exact location, tell our Uber driver where we are, store personal documents and photos, and save payment details; we’re all becoming used to targeted advertising online based on our behaviours and demographic profiling.

Digitally sharing our personal details and data isn’t new, and therefore it’ll be a case of easing consumers into a new way of thinking about banking. Starting with selling the unique benefits which open banking will generate…

 

CONCEPT EXPRESS

With this in mind and using Harris Interactive’s Concept Express service, we tested consumer appetites for a number of different open banking concepts: ‘a secure mobile app that warned you if you were about to go overdrawn, or prompted you to move money from your current account into savings or overpay the mortgage’, and ‘a secure web-tool that has all your financial information in one place and enables you to see how much money you have in total and your progress towards any goals like a retirement fund’. Each concept was tested to be coming from either a well known bank or digital payments provider, so we could assess whether it was important for these tools to be provided by a traditional bank versus a digital player.

We found that:

  • There was no clear winner among the four concepts, although a secure web-tool slightly edged a secure mobile app for ‘likeability’, ‘distinctiveness’, ‘believability’ and ‘importance’.

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  • Consumers were more likely to prefer an app provided by a digital payments provider and a web tool to be provided by a well known bank.
  • A secure web tool from a well-known bank particularly stood out as being something which ‘captured my attention’ – with 55% agreeing compared with 47% agreeing for the money mobile app.
  • Interestingly, almost half (43%-49%) of consumers felt like it was a ‘natural progression for personal banking’ suggesting that it wasn’t too much of a leap from existing banking services.

However, opinion is less positive when it comes to security concerns as…

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  • At this stage, the open banking concepts are a bit like marmite — consumers are either positive and understand the benefits or do not like the concept at all. With our survey telling us that only 1 in 4 want to find out more and that just over one-third think that it would be useful to them, the sector has some way to go before the concepts become mainstream.

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Methodology:
The survey was conducted online in February 2017 amongst 625 UK adults aged 18+ using Harris Interactive’s automated Concept Express concept testing service.

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  • Banking
  • Concept Express
  • Open Banking