18 October 2017
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PSD2: Brits don't trust retailers and social media platforms with bank details

02 October 2017  |  11919 views  |  12 Online Shopping

As the revised Payments Service Directive (PSD2) nears, research from Accenture suggests that banks still have a strong trust advantage over third-party providers, with a clear majority of Brits unwilling to share their financial data with the likes of retailers and social media platforms.

Less than six months away, PSD2 will enable people across Europe to share their financial data securely with both banks and third parties, making it easier to transfer funds, compare products and manage their accounts - without their bank’s involvement.

But a survey of more than 2000 UK consumers suggests that banks should not worry too much about being cut out of the picture, with 69% saying that they will not share their account information with third-party providers. In fact, more than half say they will never change their existing banking habits and adopt open banking.

Nearly three quarters of those quizzed are reluctant to share personal financial information with retailers, while 93% are not keen on handing over their bank data to social media firms like Twitter and Facebook.

Trust in these outfits as providers of payments services is also low, with the majority of consumers saying they would be unwilling to initiate a payment through online platforms (58%) and social-media companies (82%).

Fear of fraud is the main obstacle that new players must overcome, with 85% saying that this is the biggest barrier to them sharing account information. Data protection risks and the potential for cyber attacks or viruses are also major concerns for those considering open banking.

Jeremy Light, lead, payment services practice, Europe, Accenture, says: "Until new entrants to the financial services sector can earn consumers’ trust, banks can draw on their extensive heritage to secure an important early advantage."

However, banks should not be complacent, says Accenture, noting that the appetite for open banking is higher among younger people. More than a third of Gen Z respondents — those born after 1996 — describe themselves as likely to use open banking instead of their usual method of payment in the future, compared with just 13% of Baby Boomers.

The generational divide is also evident among the one-third of consumers willing to give online retailers permission to initiate payments directly from their bank account using either apps or websites. This figure rises to 42% among millennials (those born between 1980 and 1995) and 52% among Gen Zers.

"If banks move too slowly to adapt to this transformed open banking landscape, they could miss out on the platform-based business models and the strategies they enable. In short, banks will need to up their digital game or risk failing to meet growing consumer demand for a seamless digital experience," warns Light.

Comments: (12)

Richard Andradee
Richard Andradee - Intellect Design Arena Limited - Dubai | 02 October, 2017, 07:30

While it is true that customers are concerned about leveraging the advantages of PSD2, things will change once the advantages are seen and the doubts and fears are addressed by banks. Customers were doubtful using Internet banking, mobile banking, and even ATMs - which today has been adopted effectively globally. I believe that it will be the same case with PSD2

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Bradley Howard
Bradley Howard - Endava - London | 02 October, 2017, 09:28

Interesting research. Millions of consumers already trust retailers with bank details by leaving their credit card details on file with Netflix, Amazon, Uber, Apple, etc. Just as Richard described above, as soon as the advantages of PSD2 become clear, it might end up becoming 'the norm'.

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A Finextra member
A Finextra member | 02 October, 2017, 09:49

The thing about surveys (and I guess this is an online survey) is that if you ask people about something they know nothing about, have no context for, they will be reluctant to project...if 10 years ago people were asked "would you trust a phone to store your visa card details where you could also buy third party apps" they would probably have answered a negative.. As new services are made available and people start educating the market, these issues will probably disapear pretty quickly!!!!

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Stephen Clarke
Stephen Clarke - B&Q plc - Chandlers Ford | 02 October, 2017, 09:56

I would like to see how the questions was framed to the consumer. I'm not sure that the consumer thinks about trust when they sign up to Netflix etc. Its just what they have to do to access the service.  

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 02 October, 2017, 12:53

@BradleyHoward + 1: "Millions of consumers already trust retailers with bank details by leaving their credit card details on file with Netflix, Amazon, Uber, Apple, etc."

@StephenClarke + 1: "I'm not sure that the consumer thinks about trust when they sign up to Netflix etc. Its just what they have to do to access the service."

I'm willing to wager that a majority of Brits think "bank details" means "Internet Banking UserID and Password". If I'm right, while Brits will continue to leave card on file with retailers, blindly click on "I Agree" button while signing up for popular Internet services, and continue to issue direct debit mandates to billers to pull out money directly from their bank accounts, they will stop dead on their tracks when a nonbank third party PSD2 service provider seeks access to their online banking portal in order to make payments on their behalf. I believe so partly because of trust deficit reasons but more importantly because the average consumer (Brit or otherwise) already has enough choices of payment methods and won't find any compelling need to hand over the proverbial keys to the kingdom just to get to use yet another payment method.

End of the day, you can put how much ever lipstick you want but a (retail) payment is just a necessary evil and not a high involvement product / service. 

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Emmanuelle Johaadien
Emmanuelle Johaadien - GAIN Capital Payments Limited - LONDON | 02 October, 2017, 14:35

Like some other commentators I am not convinced that those results tie in with the actual reality of idigtal payments. Amazon Pay being the biggest counter example to the finding sof this report.

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James Piggot
James Piggot - Finastra - London | 03 October, 2017, 08:32

The risk for banks is that some young innovator will create a new service or platorm that offers some compelling reasons for signing on. Thinking along the lines of WeChat in China. Then banks are reduced to providing the plumbing without the customer relationship which maybe will suit them?

A small example of something that could be improved, the online service from my banks allows me to search my transaction history in three-monthly chunks. Say I want to check my insurance bills going back over the past 3 years, that means doing 12 separate searches which is painful to say the least!

But still better than the mobile offering which has no search function at all!

Even using Brett's excellent Moven app I can only search by tag or category within date range, and there is no tag for insurance payments by the way!

My non-technical wife says (quite rightly)m  that it was easier back in the days of paper statements, I explain it's not easy for the bank because they are running an IBM mainframe that no one understands any more... blah blah blah. Then I realise how ridiculous that is, we have 20th century banking in the 21st century...

So come on you energetic visionary young innovators, create the Instagram of banking and make us all happy to manage our money safely and easily!

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Arjeh Van Oijen
Arjeh Van Oijen - IBM GBS - Amsterdam | 03 October, 2017, 10:18

@James I agree with you that players like WeChat become a serious threat of disintermediating the customer (business and retail) from the bank and leaving the bank offering APIs with which it is hard to differentiate (and make money). They run the risk becomming the airline behind Skyscanner.

The difference between Fintech and banks is not the technology that is used. It is the strategy that is followed. Fintech focus themselves on a very specific service and take care they excell in that. Succesful Fitechs also take care that they offer this service in as many countries as possible to reach as much economy of scale (cost efficiency) advantages as possible. Banks are doing everything (payments, cards, savings, loans, securities, asset management, etc.) to a many customer segments (retail, SME, corporates, private banking). Because of this lack of focus, they are not able to specialise and excell. You can't be the best in everything anymore. This makes it hard to compete with specialised Fintechs. At the same time the majority of banks are active in a relatively small market (only one country). This makes it impossible to reach the economy of scale advantages that Fintechs are able to reach. Customers shop around and pick the service provider that fits best for specific needs. If this implies that they need to make use of different service providers for different financial services, this is not considered an issue. The customer that makes use of one bank for all its financial services becomes rare. Banks need to change their strategy and start focussing and specialising to be able to compete with Fintechs.

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 03 October, 2017, 11:10

@JamesPiggot's Wife + 1. Despite working in the IT industry for three decades:)

I recently had to find out the value of the last payment I'd made to a certain service provider. I was finally able to track down that transaction only in my handwritten transaction log. Online - no search, period too short. eStatement - no search or mention of beneficiary. Printed statement - bank has stopped issuing.

I wrote In Favor Of Paper Statements in 2011. Six years later, most of my reasons for preferring paper statements then are still valid today. If anything, the KYC-related reason has become stronger now.

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João Bohner
João Bohner - Independent Consultant - Carapicuiba | 03 October, 2017, 13:39

 

I'll never ever open my banking 'DarkSide' to anybody!


Let's make things clear:


One thing is having smart, nice, agile, simple tools to HANDLE cleverly my banking 'DarkSide' and history.
The other thing is to open my banking 'DarkSide' to everybody, which is inadmissible.

@Arjeh Van Oijen:
"Banks are doing everything (payments, cards, savings, loans, securities, asset management, etc.) to a many customer segments (retail, SME, corporates, private banking)"

This is exactly the point!

Banks need to change their strategy by changing the business Architecture, focusing in the Banking Business, rather than 'specifics everythings':

The Architecture proposes the processing of the financial business in a 'Corporate way' - Single Source of Knowledge - rather than processing by 'Lines-of-business' - Silos and DWs.

This approach drastically streamlines processes and eliminates silos and DWs, providing a single source of knowledge for all of the Corporation's business, allowing simplicity and agility to the customer experience.

The Operational Cost also drops hugely.

I'm open to discuss the subject with whoever is interested in.

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Lu Zurawski
Lu Zurawski - ACI Worldwide - London | 06 October, 2017, 15:12

The fine engineering and construction efforts of the CMA9 are not being matched by customer education or market promotion activities. So no great surprise that consumers have not heard of new types of banking services, or are alarmed by “open” terminology. Perhaps we need a government-driven public awareness campaign? A Green Cross Code man for crossing digital roads. Now that Accenture own a creative agency, I hope Jeremy pitches for the business!

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 06 October, 2017, 15:55

"Customers want to leave their wallet at home".

"Customers need help with their finances".

"Customers must be permitted to switch banks".

Given the tepid response to mobile wallet, PFM / MoMMA and Account Switching technologies, these assumptions are more imagination.

Hope the assumption that customers want to cross the digital road and need help doing so is grounded on reality.

Suppliers are the ones who will benefit from adoption of their products / services. So why should public money be used for this program? Especially when vendor consortia like CFDRG and FDATA already seem to be doing some work in this space (Source). 

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