Consumers are sceptical about how much impact the initiative will have on their lives, with just two in five thinking open banking will help people throughout the UK and could improve the way they manage their finances.
The term ‘open banking’ is a problem it seems, with just one third of consumers finding it appealing and one in five considering it safe and secure. The industry needs to lead its marketing efforts with a focus on the tangible benefits open banking technology can deliver, rather than detail about the software itself.
By enabling consumers to provide more nuanced information to a financial institution, those with less access to credit could benefit most from new innovations. As a result, the 760,000 people who are under served by the market will be more receptive to open banking once they understand what they would get in return.
For customers across the social spectrum, open banking could help people better track and manage their finances in one place, as well as being able to show lenders the full picture of their financial situation.
However, consumers fear losing control with 73% of more financially literate consumers worried about the danger of wider access to their data. Two thirds of well-financially served consumers were worried they would be judged on their spending habits, or end up with a lower credit rating, with slightly less of the financially under served at 62% also concerned.
However, Clearscore said its research showed a large opportunity exists for those businesses able to use the technology to offer simple and accessible services with a clear, transparent value exchange.
The firm will launch Onescore this year initially to 500,000 users hoping to buy a home and will integrate open banking data to educate them on how they should change and improve their financial position to achieve that.
Consumers currently under served by the market will also be offered the chance to connect their bank account data to their ClearScore accounts. With their explicit permission, this data will be shared with ClearScore’s lending partners to see if the additional bank account data provides the consumer with improved credit options.
ClearScore will also offer a personal finance dashboard to its users to visibly link bank account data to a report section, combining their credit report and bank account data.
Justin Basini, CEO of ClearScore, said: “Open banking has huge potential to give consumers better control over their finances, especially those who have limited access to financial products. But unless the industry does more to explain the tangible benefits to consumers and create real products that make a difference, consumers will be the ones to miss out.”
Clearscore lists Vanquis Bank, Shawbrook Bank and Oakbrook Finance among its partners.