But if consumers can be persuaded, research suggests Open Banking could potentially unleash £1bn in annual Gross Domestic Product (GDP) benefit and support 17,000 new UK jobs.
A study from the Centre for Economics and Business Research (Cebr) found that if borrowers were individually risk assessed it would lead to a £153m increase in GDP, instead of putting all borrowers in the same risk assessment bucket for off-the-shelf products.
The research suggested Open Banking would result in a 7% reduction in today’s credit spread, totalling £1.069bn in additional GDP.
The resulting data obtained through Open Banking is so comprehensive it can be used to create the hyper-personalised or predictive mortgage rate behind the £1bn GDP benefit.
Glenn Manoff, SVP at Trustpilot, said: “By giving customers the choice to provide their financial data to third parties, Open Banking is set to unleash significant innovation across UK financial services.”
He continued: “In this new world, we expect the financial services sector to see a revolution in how it deals with customers. Whether you’re a multinational bank or a fintech start-up, open, honest and transparent customer feedback will be critical to competing and winning the trust of customers in this new competitive environment.”
Progress so far
However, five of the UK’s biggest banks asked for extensions to the January Open Banking deadline, so just four – Allied Irish Bank, Danske, Lloyds Banking Group and Nationwide – were compliant by the 13 January deadline.
Meanwhile, research from Accenture shows 69% of people might not even consent to data-sharing with a third-party and it is unclear how many of the nine banks are working on the technology to create hyper-personalised mortgage rates.
Trustpilot admitted the research assumed the industry roll out had been ‘frictionless’ as six lenders continue to test the operational technology behind the Open Banking Standard with no public timeline for roll out.
Open Banking is the UK initiative to implement requirements of the EU’s Payment Services Directive II, which came into force in January.