Open Banking is still a mystery to consumers five years after its launch 

By Puja Sharma

Five years on from the launch of Open Banking in the UK, NTT DATA UK&I released new research insights into UK consumers’ understanding of Open Banking.

The research revealed the majority of UK citizens (58%) still don’t understand what it is, while data security and trust are still an issue, with just 16% of consumers believing it is completely safe. These statistics reveal that even though Open Banking is rapidly growing in the UK, with Neobanks and FinTechs becoming established players in recent years, there are still concrete concerns from consumers that prevent it from reaching its full potential.

Although the research made consumers’ concerns clear, it also revealed the top 3 expectations from consumers of their bank, meaning the future is not hopeless for banks & FIs.

Consumers want:

• Fast and easy transactions (80%)
• Higher convenience when accessing banking services (70%)
• Accessing multiple services through banking apps (55%)

Global open banking was pioneered in the form of PSD2 legislation in the UK. That legislation was enacted on 13 January 2018 and now, five years later, there are variations of open banking all around the world. The common aim is to open up access to banking data and payments to enhance customer experiences and reinvent product and business models. However, for real progress and impact, consumers need to understand that the open banking ecosystem is safe and secure and that they stay in control of their data and finances – and on this front, the research has found that banks are failing.

NTT DATA, which offers its own composable open banking platform called Platea, works with several international banks and FinTechs on both business consultancy and technical implementation. It conducted consumer research on a sample of 1,000 respondents across the UK, seeking to find out how well they understand Open Banking today, and whether they knowingly or unknowingly use its services.

When the concept of Open Banking was explained, over half of the respondents (52%) stated that they thought Open Banking could deliver a more valuable and personalised experience in the future.

However, the research found the combination of consumers not fully understanding Open Banking (60%), not using it or knowing whether they use it (63%), and not fully trusting it (84%) is holding back implementation. Concerns around security will need to be addressed before public opinion begins to shift.

Andy Nelson, Head of Banking and Financial Markets at NTT DATA UK&I, said, “Open Banking is undoubtedly a fantastic initiative. In the five years since PSD2 legislation was enacted, we’ve seen a wave of fintech-led innovation helping to break down traditional banking silos and create more choices and better outcomes for consumers.

“However, as our research shows, consumers are still not embracing open banking – and it’s not just that they don’t understand it, although that’s an aspect, it’s that they don’t fully trust it.

“As an industry, we need to work together to provide the necessary education to earn consumers’ trust and demonstrate the value it can bring them. Once the general understanding of Open Banking is increased, we’re confident that the benefits will be felt by all, as customers can receive an optimised, personalised, and most importantly, improved service from their bank.”

Friday, 13th January 2023 marked the 5th anniversary of Open Banking.

Key Highlights

• Around 58% of consumers don’t understand what Open Banking is
• Even though Open Banking is rapidly growing in the UK, with Neobanks and FinTechs becoming established players in recent years
• Just 16% of consumers believe that it is safe
• Consumers are still not embracing open banking as they don’t fully trust it.