It is time to improve Open Banking understanding among consumers and businesses

By Gaia Lamperti

New research by international payment service provider and direct bank card acquirer ECOMMPAY found that only 14% of consumers ‘completely understand’ Open Banking and even fewer businesses grasp how it could help them grow their business.

Introduced in 2018, it is the process carried out by banks and other financial institutions to open up data for regulated providers to access, use and share. It makes it easier for consumers to view their finances, take out loans or pay for things online, while businesses also benefit from faster payments, more information and understanding of their customers, and greater opportunity to innovate by adding more revenue streams via apps and other financial products while paying less for services.

It is now commonly agreed that Open Banking has the potential to truly create an entirely new relationship between consumers, businesses, and banking by enabling secure and consented data sharing between banks and third parties.

Yet, there is still some level of confusion about it and how it works and its uses. According to ECOMMPAY’s study, 28% of consumers have ‘no idea’ what Open Banking is and a further 20% stated that they were a ‘little confused’ about the term and its uses.

Findings show that young generations have a better understanding of it, with approximately a quarter (24%) of 25-to-34-year old’s stating that they completely understand Open Banking, compared to only 7% of over-55s. In that age group, 4 in 10 said they had no idea what it is.

Similarly, 1 in 10 business leaders still does not understand what Open Banking is, or how it could help their business. Only 36% of business leaders surveyed said that their company had adopted Open Banking before 2021 and an additional 32% said that while they have not implemented it thus far, but they would like to this year.

The infrastructure is trying to spark competition and innovation in the financial services sector to create better products and experiences for businesses and consumers. But, as these insights show, the UK still has long to go on both implementation and education to maintain its position as an Open Banking leader.

“Technological innovation and social change are taking place at breakneck speed, and it can be hard for businesses and consumers to keep up,” Paul Marcantonio, Executive Director UK & Western Europe at ECOMMPAY, remarked. “The lack of understanding and slow implementation shows the need for further education, and that’s what we’ve provided in this whitepaper. This will ensure that businesses and consumers of all types will be able to take full advantage of Open Banking’s benefits.”

In the UK, Open Banking is guided by the OBS, a framework published by the Open Banking Implementation Entity (OBIE). The company oversees the implementation of the OBS, it is governed by the CMA and funded by the UK’s 9 largest banks and building societies: Allied Irish Bank, Bank of Ireland, Barclays, Danske, HSBC, Lloyds Banking Group, Nationwide, RBS Group and Santander.

With the latest Open Banking enforcement deadline fast approaching, ECOMMPAY research shows how the UK must improve its Open Banking knowledge if it wishes to maintain its position as a global leader in the sector.