Almost 12 months after the launch of Open Banking in the UK, awareness of it and understanding of what it means is desperately low, according to a new report from Splendid Unlimited, the company helping retailers and the big banks design and build these new digital platforms.
The study revealed that fewer than 9% of UK adults use Open Banking services. In fact, the public understanding of Open Banking services is either non-existent, simplistic or confused. Less than one in four people (22%) have heard the term and four in five don’t understand what ‘Open Banking’ means or even entails.
Asked to describe Open Banking in their own words, the top two definitions were: banks sharing your information (26%) and all accounts in one place (15%). Beyond this was little clarity – comments included “it’s online banking”, “it’s good” and “it’s easier”.
Overall, the findings clearly demonstrated widespread interest and demand for simple, significant concern about data protection, security, privacy and independent financial advice.
Yet there was a disconnect between this need and Open Banking service providers’ ability to effectively meet it.
First impressions of Open Banking were found to be mainly negative – demonstrating a clear communications failure. When participants were offered further information, second impressions were far more positive – a clear opportunity Open Banking service providers are yet to harness.
Participants were also asked to review Open Banking services they used. No clear winner emerged from the existing services they were using – either amongst products, or service providers – demonstrating room for further differentiation.
The research also highlighted dissatisfaction with a number of aspects common amongst Open Banking services and, also, some criticism of specific apps – suggesting a need for Open Banking service providers to re-think and refine their product offerings.
Clarity, transparency and simplicity are key attractors. AI, bias and complexity are key dissuaders.
Participants saw pros and cons across all apps tested. They positively rated Yolt for the ability to see all accounts in one place, spend breakdown and transparency; Chip for the same, along with its perceived independence.
Although Connected Money came out on top, participants questioned whether their own financial situation was complicated enough to warrant using this app. Many also expressed concern about Chip’s ability to potentially ‘siphon off’ money for investing from overdrawn accounts with it assumed that AI is “managing my money”. Bean was highlighted for possible bias; and Consents.Online for complexity – especially, its use of complex language.
Overall, trust was a key issue, the findings also show. At a time when trust in financial institutions has stalled[i] and public concern about data breaches and data security have never been higher[ii], it seems there is a perception that the ‘open’ in Open Banking infers a lack of security.
Paul Bishop, founder and MD of Splendid Unlimited, the company helping retailers and the big banks build these new digital platforms, said: “Overall, Open Banking providers are failing to address the lack of trust, privacy and security concerns, and ignorance of the benefits of using their products that have limited uptake of their services to a mere 9%.
“These findings highlight a number of key challenges Open Banking service providers must now address.
“But they also offer key lessons for the effective and successful roll-out of other new technology-driven service innovations – notably, the further and more widespread introduction of blockchain technology – both in the financial services sector, and beyond.”