Why some consumers are wary of open banking

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Open banking, or the practice that lets banks securely share account data with third-party apps through application programming interfaces, is often heralded as the future of banking. But data sharing is dependent on customer consent, and for some users, a trust deficit is impeding their embrace of the concept.

According to a recent Aite Group study, while many respondents expressed interest in open-banking services, 49% of those queried about account aggregation services [supported by open banking] worried about the security of their data. In addition, a majority preferred their main bank as the provider of open-banking services as opposed to third-party platforms.

Indeed, trust in incumbent institutions still motivates consumer choices. The study surveyed 1,010 European consumers in five countries; Finland, France, Germany, Spain, and the United Kingdom. There were approximately 200 participants in each country for the study. 

Aite Group argued that consumers can be eased into using open-banking services if they are offered by trusted brands. “Open banking offers an opportunity for banks to develop new retail banking services,” the study concluded. “It appears that banks are still in a dominant position to offer such new services.”

To read our analysis of the report, click here