Open Banking: Consumer appetite for new banking services

Around the world, banks are opening up their customers’ financial data (with the customers’ consent) to third parties through application programming interfaces (APIs).

The global trend of Open Banking allows third parties, such as FinTech companies, to create new financial products. Open Banking responds to customer demand for more choice, better customer experience, and more control over their data – states a report from Mobey Forum.

While still in initial stages, Open Banking will lead to the next wave of digitisation in payments, reconfiguring age-old value chains and changing business models. Third party providers (TPPs) can compete with banks to offer new financial products, opening opportunities for new entrants to innovate and compete with incumbent banks.

In September 2019 the revised Payment Services Directive (PSD2) came into full effect in the European Union, following an implementation deadline for the regulatory technical standards. The question now is whether consumers will embrace the new services enabled by open banking, and under which conditions.

To inform this report, Mobey Forum and Aite Group asked over 1,000 consumers in five European countries how interested they are in five Open Banking services: Account Information, Pay by Bank, Product Comparison, Purchase Financing, and Identity Check.

The objective was to obtain a market view on consumer interest in new Open Banking services and the possible roadblocks for consumer adoption.

With the introduction in Europe, banks and other financial service providers are bringing new services to market. The question is whether consumers will embrace these new services, and under which conditions.

For this report, consumers have been asked for their opinion on five of the new service use-cases enabled: Account Information Service, Pay by Bank, Purchase Financing, Financial Product Comparison, and Identity Check.

Key Takeaways

1. As the European Union’s September 14, 2019 regulatory deadline for banks to open up their payment accounts via APIs has passed, Open Banking takes center stage in European retail banking and payments. The market is in the early stages of development, and it is unclear if consumers are ready to adopt Open Banking services when these are introduced.
2. Roughly a third of consumers are extremely or very interested in the Open Banking services surveyed in this report: Account Information Services (32%), Pay by Bank (33%), Purchase Financing (25%), Product Comparison (35%), and Identity Check (35%). Confidence that Open Banking providers are trustworthy stewards of their data, however, is crucial to consumers’ willingness to adopt.
3. A large majority of consumers would prefer their main bank to be their primary provider of Open Banking services. Consumers are hesitant to share their account data with other banks or third-party providers.
4. Respondents also trust that banks have their best interest at heart and want banks to provide comparative pricing information about financial service products.
5. The major concerns respondents cited for lack of interest in Open Banking were security and privacy – consumers are reluctant to share their financial information with third parties.
6. When it comes to online payments, consumers are ready to change their payment methods if the alternative method is seen as more trustworthy, more convenient or provides the consumer with a financial incentive.

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