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Only 14% of UK consumers ‘completely understand’ Open Banking - Ecommpay

Only 14% of UK consumers ‘completely understand’ Open Banking - Ecommpay

Ecommpay, payment service provider and card acquirer, has released new data as part of its whitepaper entitled, ‘Beyond the pandemic: The outlook for Open Banking’.

Key findings include that almost half (48%) of consumers surveyed have some level of confusion about Open Banking and its uses, and 10% business leaders don’t understand how Open Banking could help their business.

While the survey found that 14% of UK consumer ‘completely understand’ open banking, Ecommpay states that the findings at large show a lack of understanding of Open Banking.

As we approach the latest UK Open Banking deadline on 14th September, Ecommpay highlights that the UK must improve its Open Banking knowledge if it wishes to maintain its position as a global leader in the sector.

The report states that other nations such as the US and Canada are enacting their own Open Banking programs, and this data shines a light on consumer perceptions of Open Banking and the opportunity for British businesses to use this payments technology to grow.

The surveys also found some age disparities. 24% of 25-to-34-year-olds stated that they completely understand Open Banking, compared with 7% of over-55s. What’s more, 40% of over-55s said they had no idea what Open Banking is.

Only 36% of business leaders surveyed said their company had adopted Open Banking before 2021. Additionally, 32% said that while they have not yet implemented Open Banking, they would like to during 2021.

The whitepaper includes the results of two surveys, one of 1,002 UK consumers, and the other of 500 business leaders in the UK. Surveys were conducted in collaboration with Censuswide, and the research was completed in March 2021.

Paul Marcantonio, executive director UK and Western Europe at ECOMMPAY remarked: “Technological innovation and social change is taking place at breakneck speed, and it can be hard for businesses and consumers to keep up. The lack of understanding and slow implementation of Open Banking products shows the need for further education, and that’s what we’ve provided in this whitepaper. This will ensure that businesses and consumers of all types will be able to take full advantage of Open Banking’s benefits.”

The whitepaper also provided some insights regarding changing preferences of customers in relation to checkout experiences. Around 71% of consumers would be ‘very’ or ‘somewhat’ likely to abandon their purchase if their chose checkout method was not available. Additionally, one in five consumers said that the payment process is ‘very’ important in the brand experience, and a further 50% stating that it’s somewhat important.

Comments: (7)

Melvin Haskins
Melvin Haskins - Haston International Limited - 06 September, 2021, 14:18Be the first to give this comment the thumbs up 0 likes

It would help if there was public information regarding the 'benefits' of open banking. Whilst I believe that understand it, it appears to be of no value to me.

James Varga
James Varga - The ID Co. - Edinburgh 07 September, 2021, 08:36Be the first to give this comment the thumbs up 0 likes

Throughout the lifecycle of Open Banking this has been an ongoing debate on how much consumers should or need to understand the topic. 

In the UK we combine Open Banking as both payments and data which in itself is confusing to most users. In many countries it just means data. As an industry this is something we need to address at some point. 

In my experience at the end of the day it doesn't matter. We have to focus on the value we can create from Open Banking and not the technology itself. There are lots of benefits to Open Banking/Open Finance Data accross a range of use cases and industries. It is creating value from this data that should be our focus as industry. 

Dian Cecht
Dian Cecht - Caspa Consulting - Madrid 07 September, 2021, 11:21Be the first to give this comment the thumbs up 0 likes

Ha! 14% think they fully understand OpenBanking

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 07 September, 2021, 11:49Be the first to give this comment the thumbs up 0 likes

There's no Open Banking regulation in USA. Still the fintech industry has created tremendous value for data exchange in the form of apps for stock trading, wealth management, automated savings, money management, etc. Exhibit A: One in four people in USA - around 80M in total - is a user of one or more of these apps and has shared their banking data with them. 

OTOH, in EU / UK, Open Banking is a regulatory mandate, it has been in the works for nearly a decade, and still there are fewer than 5M users of Open Banking apps. Seems like not even 14% of industry insiders have a clue about how to create value from Open Banking. If they stopped their obsession with scraping v. API, I'm guessing they'd have greater success at creating value from Open Banking. 

Paul Marcantonio
Paul Marcantonio - Ecommpay - London 13 September, 2021, 07:22Be the first to give this comment the thumbs up 0 likes

Thanks for your comment, Melvin. In terms of public information, there are many articles and white papers from various sources on how Open Banking can change the industry and benefit consumers. The UK is counted as one of the strongest and most advanced regions in terms of Open Banking adoption, so naturally, there is a lot of focus but I do agree that there is more education needed at the consumer level. Security is absolutely key and of paramount importance to end-users, this is where OB can reduce fraud; a user always confirms their payment via Strong Customer Authentication using Face ID, Touch ID, or unique passwords. When confirming the payment, the user is redirected to their own online banking app within a secure environment, it is important to note that only regulated providers are allowed to initiate OB payment.

For merchants who are considering Open Banking, there are 2 major factors that make it an attractive proposition – Costs & no risk of chargebacks. During the height of Covid, we saw an increased risk of chargebacks as well as fraud. Online shopping fraud statistics show that global losses from payment fraud reached $32.39 in 2020 – three times more than in 2011. 

 

 

Paul Marcantonio
Paul Marcantonio - Ecommpay - London 13 September, 2021, 07:22Be the first to give this comment the thumbs up 0 likes

Definitely agree with you, James. As an industry, we have to focus on the value that Open Banking can bring to both businesses and end-users. For businesses, the advantages are more or less straightforward (lower costs, SCA, no chargebacks, data about the users), whereas users need an explanation on why they are better off using their bank instead of a card.  Consumers are creatures of habit and are used to paying with their cards, or other traditional methods and would naturally assume that it is a more secure way to pay. We are not claiming that Open Banking will replace payment cards, but it will be interesting to see how the industry adopts Open Banking and its inherent advantages.  The industry is moving fast, creativity is key, so coming up with innovative products that consumers can use without being afraid, in this case, to use their bank, either for payment or for information. There is still room for innovation with Open Data.

Paul Marcantonio
Paul Marcantonio - Ecommpay - London 13 September, 2021, 07:23Be the first to give this comment the thumbs up 0 likes

That’s a good point, Ketharaman, if we compare the US regulation with the UK/EU regulation. In the USA Open Banking is more industry-based, whereas in the UK/EU it’s regulatory-based. When an industry in the US sees that there is a demand for opening data, it focuses on developing that product. Whereas in the UK/EU the regulator decides first that they open data and then the industry should adjust to these regulations. 

 

 

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