Open banking is appearing in many countries, with the biggest adoption happening in Europe as a result of the EU’s Payment Services Directive 2 (PSD2). But with it comes a range of concerns that the opening up of banking data to third-party providers will leave traditional banks vulnerable to faster-moving, innovative new competitors.
But this may not necessarily be the case. In fact, it could well be that the introduction of PSD2 will present a wide range of opportunities for banks to take advantage of their many years of experience and leverage the trust they have built up from customers over this time to get ahead of the new generation of competitors.
Banks hold clear trust advantage
While PSD2 will in principle allow a wide range of organizations to access consumers’ financial data, in practice many individuals may feel less than comfortable with handing over such information to firms that do not have a proven track record.
Indeed, a recent survey by Accenture found that in the UK, the likes of online retailers, tech firms and social media companies have a lot of work to do if they are to convince customers to share their details. Nearly seven out of ten respondents (69 percent) said they would not share bank account information with these providers, while 53 percent stated they would not change their existing habits in order to embrace open banking.
Social media companies in particular were viewed with skepticism, with 93 percent of consumers being reluctant to share financial information and 83 percent being unwilling to initiate a payment via a social media company.
Concerns over fraud were cited as the biggest reason for an unwillingness to share details, with 85 percent saying this is the biggest barrier to accepting open banking. Data protection risks (74 percent) and the potential for cyber attacks or viruses (69 percent) were also named as major concerns.