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Customer attitudes to open banking six months on

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Taking information that's already out there, Shed Research has pulled together what UK consumers think about open banking.

What's the appeal, what are the barriers, and how do we overcome them?

Published in: Technology
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Customer attitudes to open banking six months on

  1. 1. THE QUIET EARTHQUAKE: OPEN BANKING IN THE UK SIX MONTHS ON
  2. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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

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