15th July 2019
Open banking stuck in the starting blocks, 75% of consumers unaware of it
London, 15th July 2019 – New research from UK fintech ClearScore and its industry partners reveals that 18 months since the UK’s open banking initiative launched, an overwhelming three-quarters of consumers are still unaware of it.
Consumers are sceptical about how much impact the initiative will have on their lives. Just two in five think open banking will help people throughout the UK and that it will improve the way they manage their finances. The term ‘open banking’ itself creates barriers to adoption, with just one third of consumers finding it appealing and one in five considering it safe and secure. The industry needs to lead its marketing efforts with a focus on the benefits open banking technology can deliver, rather than the technology itself.
Open banking won’t have an impact on improving consumers lives and financial wellbeing unless financial service institutions do more to integrate it into products that have tangible consumer benefits.
The research reveals a difference in perceptions towards open banking between consumers who have wide access to financial products and those who don’t. By enabling consumers to provide more nuanced information to a financial institution, those who currently have less access to credit could stand to benefit most from new innovations. As a result, people who are underserved by the market will be more receptive to open banking once they understand what they would get in return. 760,000 UK consumers could benefit from sharing their data to supplement their ‘thin credit files’ and gain greater access to credit1.
For all customers, the possibilities for innovation in open banking could help people better track and manage their finances in one place, as well as being able to show lenders the full picture of their financial situation.
For open banking innovation to become a reality, however, the following consumer concerns need to be addressed:
- Losing control: Not knowing who has access to their data is a worry for three quarters (73%) of those who can readily access financial products, and 66% of those who can’t. Similar proportions are worried that their sensitive financial data might be used in an unauthorised or fraudulent manner.
- Being judged and penalised: 66% of served and 62% of underserved people worry they could be unfairly judged on their spending habits, and around half of consumers worry that sharing their data might result in a lower credit rating.
- Lack of benefits: Two-thirds (67% of served people and 64% of underserved) fear they could share their data and not receive anything in return.
Despite a slow start to adoption, ClearScore’s research highlights that a large opportunity exists for those businesses who are able to use the technology to provide services that are simple for consumers to sign up to, and which provide a clear value exchange for them opening up their bank account data. Transparency on how their data will be used and for what purpose is paramount.
ClearScore is launching a raft of innovations in 2019 to address these concerns and introduce the tangible benefits of open banking to its 8m UK users in a way that is calm, clear, and easy to understand.
- OneScore: Launching initially to the 500,000 users who are actively preparing or thinking about the dream of owning their own home, OneScore will integrate open banking data to help users understand how they should change and improve their financial position to move towards their dream home.
- Offers boost with open banking: ClearScore will give users who are currently underserved by the market the opportunity to connect their bank account data to their ClearScore accounts. With their explicit permission, this data will be shared with ClearScore’s lending partners to see if the additional bank account data provides the consumer with improved credit options.
- All in your ClearScore: ClearScore will enable all users to link their bank account data to their report section, providing them with the most comprehensive view of their finances possible, combining their credit report and bank account data all in one convenient place.
Justin Basini, CEO of ClearScore, said; “Open banking has huge potential to give consumers better control over their finances, especially those who have limited access to financial products. But unless the industry does more to explain the tangible benefits to consumers and create real products that make a difference, consumers will be the ones to miss out. That’s why we’ve committed to developing new innovations such as OneScore to turn the vague benefits of open banking into real products that can help everyone to improve their financial wellbeing, no matter what their circumstances.”