By Roy Urrico
Finopotamus aims to highlight white papers, surveys and reports that provide a glimpse as to what is taking place and/or impacting credit unions and other organizations in the financial services industry.
Open banking experienced an upsurge in adoption globally as a result of the COVID-19 pandemic, and research indicated a marked change in attitude and priorities as a result of the crisis. However, a significant misunderstanding of open banking still hampers its adoption.
That is according to a Censuswide survey of 2,000 global consumers, commissioned by Mambu, which provides a banking and financial services platform.
“The research reveals the majority of customers don’t understand what open banking is, how it works and what it means for them,” Mambu’s Chief Customer Officer Elliott Limb, said. He added, “But it also reveals they do care about receiving better financial services that support their lifestyles – smart banking. If banks address this need and lack of understanding, it will help banks build customer loyalty and provide genuinely innovative, differentiating, revenue-generating services.”
The Mambu survey found consumers hesitant to use open banking. More than half (52%) of consumers have never heard of open banking; 61% have never used it; 53% still believe that open banking is a dangerous use of data sharing; and 48% of consumers claim they are “scared” to use open banking. “To truly be customer-centric it’s time to stop talking ‘open banking’ and show them it’s simply ‘smart banking,’” the Mambu white paper based on the survey suggested.
According to the Mambu survey, 52% of respondents said they wanted more control over their finances. At the same time, 40% said the pandemic changed their attitudes to privacy and 24% to data sharing. Another lift came from the 41% who said they have had more time for research.
The survey also found consumers want more control of their finances (52%), have had the time to do their own research and understand open banking better (41%), have changed their attitude toward privacy since the pandemic began (40%), are less worried about sharing data (24%), and have had more time to set it up (40%).
Looking at this issue further, almost half of respondents claim their banks did provide reassurance on open banking safety or provide information on its numerous benefits. Another 24% stated the security explanation was insufficient. Yet some 57% said they would be more likely to use open banking if their bank had more successfully implemented and promoted it.
“Banks must accept that open banking is still a not fully comprehended phenomenon so this is the starting point,” said Dmitrii Barbasura, CEO and co-founder at Salt Edge, a Mambu partner. “We believe they need to invest time and effort in educating customers about the new possibilities they get access to, and also inform them about their rights and the high safety level covered by open banking.”
Among the features surveyed consumers seek include:
· The ability to instantly transfer money between different accounts (48%).
· View different account balances together at a glance (38%).
· Help boost savings automatically by calculating spending patterns and moving spare money into savings or investments (36%).
· Receive helpful hints about better money management (34%).
· Obtain one overall monthly bank statement (34%).
· Receive automatic suggestions about savings on bills and insurance (26%).
“Open banking hasn’t delivered what it promised. There, we said it. Yes, open banking is being used, and yes, there are advantages. But has it fully delivered on the potential to optimize how consumers move, manage and make the most of their money? We are saying no. Not yet,” the report suggested.