Privacy concerns set to stifle competition in open banking
Fintechs and challenger banks hoping to exploit the launch of open banking could be facing a long and bumpy road ahead, following a study which reveals that two-thirds of consumers in the UK say they will not share their financial data with a third party.
Hailed as the biggest shake-up of the financial services sector in decades, by January next year, the UK's nine largest lenders must have developed application programme interfaces (APIs) that allow third parties to access their customers’ data, with permission.
The main barrier to adoption so far has been a lack of awareness of the changes, with a recent Equifax study showing that 90% of Brits had not heard of the open banking initiative.
However, according to new research from Accenture, privacy concerns would prevent the majority of consumers from changing their banking habits, with more than half (53%) saying they would never change how they bank and take up more open services.
Potential applications include helping customers with budgeting, moving money across different banks’ accounts and offering personalised financial products or payment terms.
But Accenture’s research suggests that the mainstream banks will have the biggest opportunity - in the short-term at least - by capitalising on the trust customers already place in them.
Jeremy Light, managing director of Accenture Payment Services, Europe, Africa and Latin America, said: “This research shows that consumers are naturally risk averse and still prefer to go to their own bank for services than go to third parties. But it will be interesting to see how that changes over time.”