The impending arrival of Open Banking in Australia may not be news to many in the financial industry. But judging by research we conducted recently, it certainly is to everyday consumers. Of the approximately 2,000 consumers we surveyed, a mere 17 percent were aware the government is implementing new Open Banking laws that will allow them to grant more third parties access to their financial information.
The poll also showed consumers are concerned about the management of their money and financial data, and that although the whole idea of Open Banking is to have more of that data flowing to companies outside the financial sector so they can use it as a building block for innovative consumer-led products and services, people aren’t necessarily inclined to let that happen in practice. Just 17 percent said they would be willing to share banking data with non-bank third parties—even if they would benefit as a result.
A question of trust
All this may seem like a pretty grim indictment of an initiative that’s less than a year away and supposedly destined to reshape the financial landscape. The data certainly indicates there’s some work to be done in terms of educating consumers about what Open Banking entails and its implications. It may even cause some bankers to throw up their hands and wonder whether the whole thing is worth the effort, or dismiss Open Banking as just another regulatory box to tick. But that would be a mistake. And here’s why.
Australians may be deeply protective of their financial data—but they also seem to trust their banks with it more than anyone else. Over 80 percent of those surveyed said they would only trust their bank with their financial data, and just 20 percent said they would be open to giving that data to a start-up, a large technology company or a retailer—again, even if there were an incentive to do so.
Be that as it may, many of these companies will be watching Open Banking closely and looking to develop exciting new products and tools that take full advantage of the new regime. Those products and tools may run up against consumer resistance initially, but if there’s one thing consumers value as much as security, it’s convenience. This is particularly true of an emerging category of banking customer we call the ‘Nomads’: digitally savvy, demanding and accustomed to getting services on demand. These are the needs third parties will be looking to meet—and that banks themselves will increasingly have to deliver on in the future.
The relative trust that banks enjoy—and the fact that consumers may be slow to share their data with other organisations—gives banks a solid head start in the race to innovate on the back of the data Open Banking makes available. It’s up to banks to maintain and build on that lead by quickly developing targeted, on-demand services that address real customer pain points. Failing to act on the possibilities of Open Banking will eventually result in those customers—and their data—migrating elsewhere.
Of course, not all Open Banking-based experiments will succeed. But with other organisations trying, and change all but inevitable, a certain degree of boldness is required. Banks shouldn’t be afraid to try, test and fail. These are exciting times for the industry—even if most Australian consumers don’t know it yet.
For more information, read our report, Making Open Banking a Platform for Industry Transformation
Accenture at Sibos
We’ll be discussing Open Banking and other topics at Sibos. Come see us at our booth and join us in the conversation around enabling the digital economy. Keep up to date on all the latest from us around Sibos right here on the blog.