"There has not been enough work done to allay any potential fears from the consumer about what it means to sign up to Open Banking."
Despite being a relatively new cab on the rank, when it comes to financial services, Open Banking has been with us now for the best part of six years, and there are hundreds of financial institutions who are enrolled in it.
However, I suspect there is a degree of frustration around take-up and a sense of urgency that more could (and should) be done to engage consumers with Open Banking, and to allay any potential fears they may have about the sharing of their data.
In that sense, it is not surprising to read that nine of the UK’s biggest lenders are to launch a not-for-profit company aimed at instilling greater competition in financial services through the greater use of Open Banking. The benefits for lenders are obvious in terms of their ability to use this transparent and truthful data to truly assess the ability of the customer to afford the mortgage and its suitability for them.
And yet, it may well be the case that instead of focusing on the benefits of this data sharing, there has not been enough work done to allay any potential fears from the consumer about what it means to sign up to Open Banking.
Do consumers truly know how safe their use of Open Banking is? Certainly, and this is borne out by experience, a significant number of consumers are wary about the sharing of their banking data, even with a trusted professional like a mortgage adviser.
Quite rightly, in an age where so many people have either been targeted or fallen victim to cyber fraud, there is a hesitancy about what they are doing. Are they potentially handing over their financial data to fraudsters, perhaps not directly but indirectly? Could their banking information be accessed by criminals giving them an ‘in’ when it comes to targeting them for fraud?
That should certainly be a major part of any relaunch of the Open Banking system because there is no doubt in my mind, that part of the way we grow the use of Open Banking is by giving consumers confidence to use it.
What we have found through advisers using Credit Assess to access both the client’s credit report and banking information is that there is far less push back to advisers, than there might be, for example, if this was coming direct through other providers.
The reason for that is clear. The adviser has been chosen by the consumer, they are a trusted ally, and there is a strong belief that the adviser will be the gatekeeper for their data ensuring it does not find its way into the hands, not just of criminals, but those who should have no access to it anyway.
We shouldn’t underestimate how powerful advisers can be in helping develop the use of Open Banking. Consumers want advice and if their adviser is telling them that the best way to access the very best mortgage deals quickly and efficiently is by utilising a product like Credit Assess, then there is no doubt they will accept that advice.
Now, it is also going to require the adviser to walk the consumer through the process, the checks and security in place, how that data will be used, etc, but when this is done, it should be possible to have a fully-informed client who can see how it is going to aid their mortgage journey, and not put them in harm’s way from a fraud perspective.
Clearly, the big lenders are invested in Open Banking because of the competitive benefits it can bring them – not least in terms of underwriting, keeping wasted resources to a minimum, sourcing clients who meet their standards early in the process, etc. But it can also be a major advantage for all financial services firms, not least because it will give clarity to the client’s financial picture and deliver clear information on the facts, not a version of them.
Open Banking is here to stay, and it is going to play a much bigger role in how we deliver advice, products and services to consumers in the future. The opportunity to engage with it exists right now though, and by taking that opportunity, there is a much greater chance of securing quality consumer outcomes and keeping those clients for life.
