Less than a third of customers trust open banking

Less than a third of customers trust open banking

Three out of 10 UK adults would be happy to sign over access to their financial data to trusted tech companies such as Apple, Google or third-party apps using such platforms, a study has revealed.

The study by PIF ( the Prepaid International Forum ) showed that 70 per cent of people are still not ready to sign over access to their accounts, after new open banking legislation came in at the start of 2018.

The legislation allows customers to tell banks to share financial data to properly regulated third parties.

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This data is then provided in a secure way, that doesn't reveal account passwords or access codes, but does allow third parties to analyse spending habits and help find better deals.

The PIF study showed younger consumers, are more likely to happily give such permissions in order to gain financial benefits or better insights over how they manage their money.

As many as 34 per cent of those aged 18 to 24 would be happy to provide permission to a company, such as Apple, with slightly fewer (30 per cent) also trusting Google with this data.

Among older customers, just under a quarter (24 per cent) of those aged 65 or older said they would provide Apple with permission.

Alastair Graham, spokesperson for PIF, said: "Smart phones and search engines have become essential tools for everyday life and this research shows that people are now willing to consider adding open banking to the list of services that such devices help to improve.

"Mobile devices already offer many payment services, often using the prepaid platform to facilitate simple and secure transactions.  To many people, adding open banking feels like a small step."

However, financial adviser Tim Morris from Russell & Co said that although the potential for open banking sounds great, he doesn't think customers understand the implications or the benefits.

Mr Morris said: "Having worked in a bank for many years, I know that many customers who interact with the banks regularly tend to be very cautious over their financial affairs.

"For this reason, I would think there would be a relatively high level of concern about what data is shared and who it is shared with."

Andy MacIntyre, financial planner at Alan Steel Financial Management, said that customers have digested many messages about not sharing their data, and may find it hard to understand the implications.

He said: "There is a clear fraud risk that customers can't check that requests for bank details are for legitimate use under open banking. The banks are in process of starting a lot of communication to customers."

Alan Chaplin, payroll expert at Rainbow Systems, said he already uses open banking and that he believes some customers are open to it.

He said: "I already use Moneyhub so share my bank details with them. Open banking makes that easier and more secure - they and others currently use yodlee to manage connections."