If banks think they have the monopoly on customer trust when it comes to handling financial data, this survey suggests they could soon face a serious challenge.
Banks have the trust, tech firms have the clever tools; they meet in the middle. That’s how it works when it comes to divvying out financial services customers. Except now some tech firms have been so successful in winning over consumers with the quality and efficiency of their service that they become emboldened enough to take on take on the banks.
Its going to be a long hard battle but, in the payments space at least, banks may not be the go-to choice for consumer and business customers in the future.
Just under a third of UK adults (30%) would be happy to sign over access to their financial data to trusted tech companies such as Apple, Google or third-party apps using such platforms, a study has revealed.
When open banking regulation came into force back in January 2018 as part of the EU’s second Payment Services Directive (PSD2), it forced banks to open up their data, via Application Programming Interface (APIs). This enables regulated third-party providers, with a customer’s consent, to access a customer’s bank account data. This is the catalyst for change.
The kind of access granted doesn’t reveal account passwords or access codes, but does allow those third parties to analyse spending habits and potentially help customers find better deals or offer them advice. Open banking is therefore aimed at creating more competition and innovation in the payments space – and the big tech companies are on the case.
Some 34% of respondents aged 18-24 said they would be happy to provide the necessary permission to Apple. Slightly fewer (30%) said they would also trust Google with this data. Even amongst older customers, just under a quarter (24%) of those aged 65 or older said they would provide Apple with permission.
The research took a nationally representative survey sample of 1,000 UK adults. It was conducted by the Prepaid International Forum (PIF), a not-for-profit trade body representing the prepaid financial services sector.
It notes that open banking gives app developers and other financial service providers using e-money tools opportunities to offer new financial products and services. It also paves the way for businesses to collect and make payments, and offer financial services in new ways.
“Smartphones and search engines have become essential tools for everyday life and this research shows that people are now willing to consider adding open banking to the list of services that such devices help to improve,” says Alastair Graham, spokesperson for PIF.
According to Graham, innovators have been “addressing areas where traditional banking has failed to innovate or move with customer expectations”. He believes that open banking will only increase this trend. It is, he concludes, “encouraging innovation by new fintech companies who are adding real value to consumer and business banking in a way the banks would never have done so in the past and are struggling to do so even now”.
