It means 70% of UK adults are still reluctant to hand their information over to tech companies such as Apple, Google, or third-party apps.
The findings were revealed as Open Banking legislation came into force at the start of 2018, which enables consumers to tell banks to share their financial information with regulated third parties.
Under Open Banking rules, once a customer gives consent, their data is shared in a secure manner which does not reveal account passwords or access codes, but does allow analysis of spending habits and facilitate better advice and bespoke products.
Although a majority of UK consumers are still hesitant to share their data, PIF spokesperson Alastair Graham was positive about the results.
“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 such devices help to improve,” said Graham.
He continued: “Mobile devices already offer many payment services, often using the prepaid platform to facilitate simple and secure transactions. To many people, adding Open Banking feels like a small step.”
Matter of education
Daoud Fakhri, principal analyst at Global Data, said the PIF results were consistent with other consumer surveys on Open Banking – citing an Accenture study which found that 96% of consumers would not share their banking data with third parties.
However, Fakhri argued that the lack of enthusiasm was largely owing to a knowledge gap.
Fakhri commented: “One major reason for this unenthusiastic reaction is the widespread lack of knowledge.”
He continued: “The banks themselves have done next to no promotion of open banking, which is perhaps not surprising. However, the regulator, which pushed for open banking, has also failed to do much in the way of public education.
“So it’s not surprising that the public has reacted cautiously.”
Fakhri added that to improve perceptions, the industry has to better demonstrate the advantages of open banking to consumers.
“Unless this happens, open banking’s impact on the market will be slow, gradual, and limited,” said Fakhri.
The PIF research, which used a nationally representative sample of 1,000 UK adults, also showed that younger consumers are more willing to give their consent to gain financial benefits or better insights into their financial practices.
The results found that 34% of those aged 18-24 were happy to provide their information to a company such as Apple, although a lesser 30% said they would entrust the same information with Google.
Among older users, however, only 24% of respondents 65 and above said they would provide Apple with permission.
PIF’s Graham continued: “Providers using prepaid have been innovating with financial services and payment products for a number of years, addressing areas where traditional banking has failed to innovate or move with customer expectations.
“Open Banking will only increase this trend by 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.”
The UK’s open banking regulations required nine of the largest UK banks to open up their data via application programming interfaces (APIs), and came into force on 13 January 2018.
These new rules also coincided with the EU’s Second Payment Services Directive (PSD2), which gave third party providers access to a customer’s bank account and the ability to request information, given the customer’s explicit consent.
However, it was revealed in December last year that five of the nine UK lenders were not ready by the January deadline to open their data sets, forcing the Competitions and Market Authority (CMA) to offer each provider a different compliance deadline.