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THE QUIET EARTHQUAKE:
OPEN BANKING IN THE UK
SIX MONTHS ON
© Shed Research Consulting Limited, 2018
The potential is huge
• Open Banking came into force in
January 2018
• It aims to encourage more
competition in banking by opening
up access to transaction data
• Customers are securely able to
share data with third-party
companies, apps and websites
Customer
benefits
A clearer view of
your finances
Better user
experience
Quick, easy and
direct payments
Recommendations /
offers based on
actual spending
Shop around more
accurately
More competition
between providers
Source: www.openbanking.org.uk
© Shed Research Consulting Limited, 2018
But it’s been a “quiet earthquake”
March
2017
January
2018
May
2018
Open Banking is “an
earthquake in
European Banking”
(The Economist)
UK Government
briefing paper refers
to its arrival as
“rather quiet”
© Shed Research Consulting Limited, 2018
This is partly because few companies
have made it central to their strategy
Starling launched
first public API
Connected Money
trial with 10k
First Direct / Bud
partnership trial
Money Hub
Money Dashboard Yolt (ING) Goldman Sachs
acquires Clarity
Money
NatWest card-free
at Carphone
Warehouse
Adapted and expanded from https://www.which.co.uk/news/2018/01/the-apps-revolutionising-your-budget-in-2018
Only 13% of bank
executives see
PSD2/Open Banking as
one of the biggest
impacts on retail banks
in years to 2020
The Economist Intelligence Unit,
2018
There aren’t many early movers in Open Banking
© Shed Research Consulting Limited, 2018
And maybe because consumers aren’t
clamouring for it
Source: MINTEL Consumer Attitudes towards FS Innovation, UK, Feb 2017 – Lightspeed/MINTEL
research with 1,942 internet users, aged 18+ (neither and dk excluded from chart)
Service/app that lets/gives you…
© Shed Research Consulting Limited, 2018
Customers’ primary concern about
Open Banking is data security
Financial data is
the type of data
people are most
concerned about
sharing online
Sources: Gusto Open Banking Research, 2017 / MINTEL Attitudes towards data sharing, March 2018
92% say concerns their
money might not be
secure would discourage
them from using services
Having financial data
hacked or stolen is #1
online security concern
© Shed Research Consulting Limited, 2018
Only 50% of UK
internet users do their
banking on a mobile
versus 62% in Sweden
Global Web Index, 2018
This may be more of an issue in the UK
than elsewhere
UK digital banking penetration
is behind many EU countries
Source: UK Digital Banking and Payments, eMarketer, April 2018Source: Eurostat, ICT Usage in Households and by Individuals 2017, Dec 2017
“UK consumers have a few trust
issues with mobile and are reticent
to move their financial dealings fully
over to these devices”
eMarketer, April 2018
© Shed Research Consulting Limited, 2018
But it isn’t insoluble
Sources: 1 = Gusto Open Banking Research, 2017 / 2 =
Attitudes towards data sharing, MINTEL, March 2018
The context
matters
• UK consumers are
more comfortable
sharing personal
data on laptops
(34%) than
smartphones (25%)
2
Reassurance
matters
• 87% say improved
security of their
money would
encourage them to
use such open
banking services 1
And it depends
which data
• Of all types of data,
consumers are least
concerned about
sharing their past
purchases 2
Implication: demonstrate the benefits of Open Banking
by initially asking consumers to share only purchase data
© Shed Research Consulting Limited, 2018
Plus 30% of
people happy to
share data for
“free samples of
products I’ve
viewed or
purchased”
When demonstrating the benefits,
money talks
Implication: focus on cost and saving initially – these
are relatable and relevant customer benefits
Would encourage you to share transaction/banking data
Source: Open Banking Incentives,
MINTEL/Lightspeed, June 2017 (Top three shown)
Source: Attitudes towards data sharing,
MINTEL, March 2018
40% personalised
offers on utilities e.g.
energy, broadband
47% notifications to
help avoid charges
e.g. overdraft
40% fast approval
on new FS products
e.g. mortgage
© Shed Research Consulting Limited, 2018
Building trust will be vital
Source: Attitudes towards data
sharing, MINTEL, March 2018
Most trusted for sharing transaction/banking data
17%
17%
24%
27%
29%
31%
Technology companies e.g. Apple or Google
Mobile phone networks e.g. Vodafone
TV providers e.g. Sky or Netflix
Bank or financial services companies
High street retailers e.g. John Lewis or
Tesco
Online only retailers e.g. Amazon
Others less than 15%
But 38%
trust no-one
on this list
Implication: banks and FS
providers are well-
positioned. But partnering
with trusted retailers will
further reassure
customers
© Shed Research Consulting Limited, 2018
And it’s likely younger consumers will
lead the change
Source: MINTEL, FinTech 2017 Review;
aggregation and open banking, 19th Dec 2017
“Millennials are likely to be
early adopters… given their
stronger desire for more
convenient ways to access
multiple financial products
through one centralised
application…”
“[They] are also by
far the most willing
to reconsider who
they bank with, and
are the least likely
to have concerns
about sharing data”
© Shed Research Consulting Limited, 2018
What this all means
1. It’s been a slowstart but Open Banking has huge potential
2. Early movers can win loyalty, particularly with younger consumers
3. Data security will be vital to reassure consumers
4. FS providers can build consumer trust through:
a. Retailer
partnerships
b. Emphasising
data security in
any proposition
c. Mobile and
desktop / laptop
interfaces
d. Starting with
purchase data to
prove concept
e. Focusing on
monetary benefits
(savings, deals,
rewards)
© Shed Research Consulting Limited, 2018
For more information on
how we can help you
make more of existing
research, get in touch
Dan Young
Director, Shed Research Consulting
dan@shedresearch.co.uk
+44(0) 7980 988 762

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Customer attitudes to open banking six months on

  • 1. THE QUIET EARTHQUAKE: OPEN BANKING IN THE UK SIX MONTHS ON
  • 2. © Shed Research Consulting Limited, 2018 The potential is huge • Open Banking came into force in January 2018 • It aims to encourage more competition in banking by opening up access to transaction data • Customers are securely able to share data with third-party companies, apps and websites Customer benefits A clearer view of your finances Better user experience Quick, easy and direct payments Recommendations / offers based on actual spending Shop around more accurately More competition between providers Source: www.openbanking.org.uk
  • 3. © Shed Research Consulting Limited, 2018 But it’s been a “quiet earthquake” March 2017 January 2018 May 2018 Open Banking is “an earthquake in European Banking” (The Economist) UK Government briefing paper refers to its arrival as “rather quiet”
  • 4. © Shed Research Consulting Limited, 2018 This is partly because few companies have made it central to their strategy Starling launched first public API Connected Money trial with 10k First Direct / Bud partnership trial Money Hub Money Dashboard Yolt (ING) Goldman Sachs acquires Clarity Money NatWest card-free at Carphone Warehouse Adapted and expanded from https://www.which.co.uk/news/2018/01/the-apps-revolutionising-your-budget-in-2018 Only 13% of bank executives see PSD2/Open Banking as one of the biggest impacts on retail banks in years to 2020 The Economist Intelligence Unit, 2018 There aren’t many early movers in Open Banking
  • 5. © Shed Research Consulting Limited, 2018 And maybe because consumers aren’t clamouring for it Source: MINTEL Consumer Attitudes towards FS Innovation, UK, Feb 2017 – Lightspeed/MINTEL research with 1,942 internet users, aged 18+ (neither and dk excluded from chart) Service/app that lets/gives you…
  • 6. © Shed Research Consulting Limited, 2018 Customers’ primary concern about Open Banking is data security Financial data is the type of data people are most concerned about sharing online Sources: Gusto Open Banking Research, 2017 / MINTEL Attitudes towards data sharing, March 2018 92% say concerns their money might not be secure would discourage them from using services Having financial data hacked or stolen is #1 online security concern
  • 7. © Shed Research Consulting Limited, 2018 Only 50% of UK internet users do their banking on a mobile versus 62% in Sweden Global Web Index, 2018 This may be more of an issue in the UK than elsewhere UK digital banking penetration is behind many EU countries Source: UK Digital Banking and Payments, eMarketer, April 2018Source: Eurostat, ICT Usage in Households and by Individuals 2017, Dec 2017 “UK consumers have a few trust issues with mobile and are reticent to move their financial dealings fully over to these devices” eMarketer, April 2018
  • 8. © Shed Research Consulting Limited, 2018 But it isn’t insoluble Sources: 1 = Gusto Open Banking Research, 2017 / 2 = Attitudes towards data sharing, MINTEL, March 2018 The context matters • UK consumers are more comfortable sharing personal data on laptops (34%) than smartphones (25%) 2 Reassurance matters • 87% say improved security of their money would encourage them to use such open banking services 1 And it depends which data • Of all types of data, consumers are least concerned about sharing their past purchases 2 Implication: demonstrate the benefits of Open Banking by initially asking consumers to share only purchase data
  • 9. © Shed Research Consulting Limited, 2018 Plus 30% of people happy to share data for “free samples of products I’ve viewed or purchased” When demonstrating the benefits, money talks Implication: focus on cost and saving initially – these are relatable and relevant customer benefits Would encourage you to share transaction/banking data Source: Open Banking Incentives, MINTEL/Lightspeed, June 2017 (Top three shown) Source: Attitudes towards data sharing, MINTEL, March 2018 40% personalised offers on utilities e.g. energy, broadband 47% notifications to help avoid charges e.g. overdraft 40% fast approval on new FS products e.g. mortgage
  • 10. © Shed Research Consulting Limited, 2018 Building trust will be vital Source: Attitudes towards data sharing, MINTEL, March 2018 Most trusted for sharing transaction/banking data 17% 17% 24% 27% 29% 31% Technology companies e.g. Apple or Google Mobile phone networks e.g. Vodafone TV providers e.g. Sky or Netflix Bank or financial services companies High street retailers e.g. John Lewis or Tesco Online only retailers e.g. Amazon Others less than 15% But 38% trust no-one on this list Implication: banks and FS providers are well- positioned. But partnering with trusted retailers will further reassure customers
  • 11. © Shed Research Consulting Limited, 2018 And it’s likely younger consumers will lead the change Source: MINTEL, FinTech 2017 Review; aggregation and open banking, 19th Dec 2017 “Millennials are likely to be early adopters… given their stronger desire for more convenient ways to access multiple financial products through one centralised application…” “[They] are also by far the most willing to reconsider who they bank with, and are the least likely to have concerns about sharing data”
  • 12. © Shed Research Consulting Limited, 2018 What this all means 1. It’s been a slowstart but Open Banking has huge potential 2. Early movers can win loyalty, particularly with younger consumers 3. Data security will be vital to reassure consumers 4. FS providers can build consumer trust through: a. Retailer partnerships b. Emphasising data security in any proposition c. Mobile and desktop / laptop interfaces d. Starting with purchase data to prove concept e. Focusing on monetary benefits (savings, deals, rewards)
  • 13. © Shed Research Consulting Limited, 2018 For more information on how we can help you make more of existing research, get in touch Dan Young Director, Shed Research Consulting dan@shedresearch.co.uk +44(0) 7980 988 762