The EY Consumer Directed Finance survey reveals that Canadian Millennials and Gen Z are more open to switching financial service providers (31%) and sharing their data in exchange for customized rewards (45%), compared to consumers aged 55 and up who are less inclined to change their traditional banking behaviours.
“The ability to innovate with specific customer needs in mind is a powerful tool,” says Abhishek Sinha, EY Canada Open Banking Leader. “Because younger people are more willing to share data, financial institutions can leverage this insight to uncover new ways of innovating and personalizing customer experiences, while potentially developing new business models.”
Preferences for the type of data consumers are willing to share is shifting, too, as the majority of respondents across Canada now prefer to share product preference data rather than financial account or account balance data. This number shoots up even higher (63%) among students.
“Privacy remains a top concern among Canadians when considering an open banking marketplace,” says Paul Battista, EY Canada Financial Services Leader. “Information about product features and customer preferences appear less personally damaging in the case of a potential data breach. Not only does it seem less risky, but sharing this type of data provides a compelling potential upside for the customer since it’s likely to produce higher-quality, personalized banking experiences and targeted offers for consumers.”
Enhancing transparency around the risks and benefits associated with data sharing can help build an ecosystem of trust, but survey results show that perhaps the largest untapped opportunity for financial institutions to bring older demographics on board with the promise and benefits of open banking, lies within non-financial incentives. Canadians aged 45 and up identified factors like rewards points, access to exclusive deals and even frequent flyer miles among the benefits they value most in exchange for data sharing.
“Since much of a customer’s willingness to switch providers is tied back to the perceived value of products and services, new and emerging companies will need to show the best kind of value for the right customer to cultivate the level of trust that encourages Canadians of all ages to opt in,” says Sinha. “Regulators can play their part by building environments that support innovation and reassure consumers, but ultimately the ability to provide Canadian banking customers with better value through more customized products and services will drive open banking success in Canada.”
To learn more about the open banking adoption, click here.