PSD2: Lack of trust ‘gives banks the edge’
Written by Anthony Strzalek
As PSD2 nears, two thirds of UK consumers said they will not share their personal financial data with third-party providers, giving banks an advantage, new research has found.
Less than six months before the revised Payments Service Directive (PSD2) makes open banking a reality across Europe, research from Accenture found that UK consumers are wary of sharing their financial data with third-party providers, giving banks the opportunity to benefit from the trust they have built with their customers over the years.
PSD2 will allow consumers to share their financial data securely with both banks and third parties, in a move designed to make it easier to transfer funds, compare products and manage their accounts without their bank’s involvement.
The Accenture research, which polled more than 2,000 UK consumers, found that online retailers, tech firms and social-media companies face an uphill battle to expand into the financial services sector, with 69 per cent of consumers saying they would not share their bank account information with these third-party providers.
More than half (53 per cent) of the consumers said they will never change their existing banking habits and adopt open banking.
The research suggested that retail and social-media companies did not fare well with consumers, with 73 per cent reluctant to share personal financial information with retailers and 93 per cent reluctant to share that information with social-media companies.
Fraud is the primary obstacle to consumers embracing open banking, with 85 percent claiming increased risk of fraud as the biggest barrier to them sharing bank account information with third-party providers.
Data protection risks and the potential for cyber attacks or viruses were also noted as major concerns by those considering open banking, cited by 74 percent and 69 percent of consumers, respectively.
Jeremy Light, a managing director at Accenture who leads the company’s Payment Services Practice in Europe, said: “Open banking has the potential to transform consumers’ relationships with financial products, but it hinges on consumers’ willingness to embrace it. 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.
“The immediate challenge for participating retailers, FinTechs, social-media companies and banks is to develop propositions for those consumers willing to use open banking, encouraging repeated use and fueling wider adoption.”