Jonathan Westley, managing director for consumer information services at Experian, explores whether consumers are really willing to share their data in an Open Banking environment.
How would your customers react if you told them they could get a better deal or an improved service so long as they reveal details about their current account? That’s the value exchange financial service providers will be able to offer their customers from Saturday, January 13, when the new standards of Open Banking come into force.
It’s fairer to describe the implementation of Open Banking as evolution rather than revolution. Customers will not wake up to find everything has changed over the weekend, instead there will be a gradual introduction of new services.
Allowing customers to give permission for other providers to access their current account information will empower people to access better rates or more suitable products. Competition will be greater when a range of providers can understand people’s financial commitments and make higher quality decisions on affordability.
As with any new regulation, public awareness has reached a crescendo at the point it comes into effect. In the week leading up to the new standards coming in, newspaper front pages and opinion leaders have been picking over what it means for their readers. The debate, so far, has reflected a spectrum of attitudes to the data sharing Open Banking makes possible.
For financial service providers to make a success of the new regulations they will need to understand the attitudes of their customers towards data sharing. Experian’s whitepaper, Delivering value in the digital age, used research carried out with C Space to profile four different groups of people and their appetites for sharing data to receive a service.
The largest group is The Accepting, who make up 41 percent of the population. They see exchanging information for products and services as an inevitable trade off to get what they want, but they are hardly enthusiastic about the process. It’s fair to assume they will take up the opportunities of Open Banking, though they might initially be sceptical, so it’s important to guide them on the benefits of data sharing.
A further 28 percent can be referred to as The Cautious, taking more care over their approach to the data exchange and making sure the companies which request their information are legitimate and trustworthy. Financial service providers will need to be transparent and build confidence slowly in offering them services.
But their reluctance to exchange information is nothing compared to the 9 percent of the population who can be called The Incognito. This smaller group of people has figured out ways to avoid sharing information they don’t want to, steering clear of anything they perceive as hassle or intrusion. However, with good communications and by building trust over time they can be persuaded to share information where there is value for them.
The remaining 22 percent of the population fall into The Unaware category and are most likely to click accept for services before they truly understand what they are doing. They have little engagement with how their data might be used. Financial service providers should make a special effort to ensure this group is informed of what the value exchange means in a clear and concise way.
Open Banking presents a significant opportunity for banks to offer new services to their customers and compete in finding new ones. But this chance can only be grasped if they have a full understanding of their customers’ varying attitudes to data sharing.