Brits — they’re just like us!
British consumers’ attitudes and behavior toward open banking resemble those of Americans — confused about what it is and unaware of how much data they are already sharing, according to a new survey.
The research is useful to U.S. banks because it shows how open banking is playing out in a country that is a step or two ahead of ours in insisting that banks share their consumer account data with third-party fintechs, such as personal financial management providers, automated savings apps, robo advisers and the like.
Thanks to an open banking law called PSD2 that took effect in the United Kingdom in January, as well as a U.K. open banking initiative, the nine largest financial institutions in the country have been told to open their consumer bank account data through application programming interfaces to third parties in a uniform way whenever consumers ask them to do so. This is a work in progress as most of the banks have applied for deadline extensions.
But according to a survey of more than 2,000 people that has not yet been released by the research firm RFi Group, only 16% of British consumers know what open banking is.
“The vast majority have no understanding at all,” said Victoria Bateman, managing director for Europe, the Middle East and Africa at RFi Group.
This is similar to the U.S., where open banking is sought by fintechs, feared by most traditional banks, and off most consumers’ radar.
“Here in the U.K. there’s all sorts of hype and media coverage around potential disruption across the industry with fintechs coming in and taking over,” Bateman said. “It’s all been around, open banking is going to cause this big disruption in banking that’s not been seen for decade. But what it will come down to is the end consumer, what they think and what they do and how they’ll behave.”
Two out of five Brits say they are opposed or very hesitant to share their personal banking data for improved products or services, though three in five are open to or interested in the idea. Older consumers are more hesitant to share data than younger ones.
Small-business owners are far more interested in sharing their banking data with third parties, with only 32% expressing hesitation.
But a critical finding of the study is this: like Americans, U.K. consumers do not realize how much they are already sharing their personal data. About 30% think they share their banking data with outside apps. But in reality, 70% do. Among 25- to 34-year-olds, 29% use a fintech provider like Atom Bank, Zopa or TransferWise.
“We see that there’s a massive conflict between what they’re actually using and what they think they’re disclosing,” Bateman said. “It’s a massive contradiction.”
The study also found consumers would like banks to consume their banking data, not just send it out. About 30% of consumers said they would like traditional banks to provide them with a single view of products held with different banks. Only 14% said they would like PayPal to do this. About 7% said they would like such a service from card brands.
The open banking initiative and the EU’s General Data Protection Regulation were introduced around the same time in Britain, and the two are somewhat at odds.
“It’s a tricky one,” Bateman said. “They are competing priorities. The idea behind open banking legislation was to give customers more control over their information and the way it’s used. It’s not conflicting or competing if you look at it from that perspective, but it seems like a mixed message to the end consumer. We’re giving you the ability to share your data, but we’re also very aware that this is something that needs to be protected.”
One could argue that the more parties access and store sensitive data, the more vulnerable that data is to privacy and security breaches.
The survey raises a worry that U.S. bankers about open banking: that if they share consumer data with a third party, they will be liable if that third party breaches consumer privacy or security rules in some way.
One in three British consumers said that the provider that was given access to their information would be held responsible for its security, but another third said they believe it is the responsibility of the bank. The remainder were uncertain.
More than two in five would call their bank if they had a problem or concern with a service.
