Privacy and consent are fundamental to the success of Open Banking in the UK. While scaremongering may play a role in slowing the rate of its adoption, these tactics will far from undermine Open Banking’s overall success.
Ultimately, the key will be how confident we, as consumers, feel about the way our data is being handled. This is exactly what Open Banking Ltd., formally the Open Banking Implementation Entity (OBIE), is focused on ensuring. If delivered in the right way—which we at Ping believe it is, with security and customer experience at the forefront—Open Banking will give consumers more control than ever before.
As consumers, our financial information is already being shared with third parties, such as “trusted” credit score agencies. For example, if I’m late making a credit card payment, I haven’t given any explicit consent for that information to be passed on to a third party; it simply gets provided automatically.
With Open Banking, information is also being passed onto a third party. However, the nature of the information is different (mainly payment requests, balance information and transaction data). More importantly, there is the added element of explicit consumer consent.
While many may be skeptical about Open Banking, the positives are inarguable and far outweigh any perceived negatives. To further illustrate, we’ve developed the following FAQs to address some common concerns about Open Banking and help explain why these concerns are unfounded.
What are consumers worried about? Are they right to be worried? Since the start of online banking, we’ve been ingrained as consumers to protect access to our bank accounts. We’ve been taught to allow access to no one, primarily to prevent fraudulent activities that would wrongfully remove our funds.
Yet, Open Banking allows trusted payment processors to remove funds directly from our bank account. Of course, this is only after we’ve given our consent and approval. Still, it’s only natural that, as cautious consumers, we might have concerns about this access.
But these concerns can be put to rest. As stated, only those entities that have your expressed consent and approval can access your bank accounts. Plus, there are strict security and technical standards that underpin UK Open Banking—designed to provide all of the protection consumers need. What’s lacking is education. If we better inform consumers, they’ll gain confidence in the ecosystem and, subsequently, reap the benefits Open Banking promises to deliver.
Will attitudes to Open Banking change over time? Open Banking is just one part of a much broader “open business” movement to address the storage and sharing of personal and corporate data. With the implementation of Open Banking and PSD2, we’re seeing this issue being tackled in the financial industry specifically. But other business sectors, like healthcare and telecom, are beginning to follow suit with their own industry-specific developments, allowing the sharing of information to provide better customer experience.
Regulations are rarely welcomed, but they are driving needed innovations across several industries. Additionally, most people are initially resistant to change, specifically when it comes to technology. However, once they see tangible results, they begin to change their attitudes and behaviours.
We believe the same will occur with Open Banking. Some will resist getting on board straight away. But over time, we will see it become the new normal. Perhaps new generations of banking users will help to accelerate this change as well.
How can banks and providers reassure customers? The most effective way for banks and providers to reassure customers is to implement and carry out a dedicated consent model. So long as users are consistently and appropriately informed on what they’re agreeing to, they have no reason for doubts or uncertainty during their customer journey.
For technology vendors, this means delivering products that balance security and experience. Financial institutions need solutions with the right security specifications that can be implemented without prohibitive complexity, while still delivering a seamless user experience.
Those organisations that will be most successful with Open Banking are the ones that seek synchronicity between security and customer experience; not those that see either as a tick-the-box part of compliance.
More importantly, however, is the role education will play in providing reassurance to consumers. For customers to feel that their data is in safe hands, banks need to provide clear explanations about consent and reinforce this with transparency about the technology being used to secure that data.
What experiences regarding security and privacy have banks and providers had with Open Banking so far? Many consumers do not realise the level of effort financial institutions have made to ensure Open Banking is implemented seamlessly. Some have been re-architecting their businesses for the past two years, employing dedicated teams to focus wholly on security, privacy and user experience. In fact, Barclays, Royal Bank of Scotland, HSBC, Santander and Bank of Ireland were given an extension on the Open Banking compliance deadline to conduct more thorough testing and ensure they could fully meet the requirements.
Is it time to move beyond privacy concerns and realise Open Banking’s advantages? Admittedly, this isn’t one of the more commonly asked questions, but we believe it should be. Instead of focusing on privacy concerns—which can easily be allayed—we need to pay more attention to how Open Banking is enabling individual control and, in doing so, driving positive innovation across the financial industry.
To learn more about moving beyond compliance to leveraging Open Banking for competitive advantage, read the Open Banking eBook.