The consumer sentiment analysis in our Index was derived from social media, blogs and forums. Overall, 30% of these references were positive and 12% were negative, for a net positive score of 17% (rounded).
This overall score was derived from sub-scores in three broad categories:
- Open banking: posts mentioning “open banking” explicitly or referring to PSD2. The net positive sentiment here was 17%.
- Sharing financial data: posts that discuss sharing of financial or bank data with third parties. The net positive sentiment was 20%.
- Services: posts that discuss apps, tools or services of the type enabled by open banking. The net positive sentiment was 24%.
The largest driver of positive discussion was innovation, which accounted for 28% of positive posts in the market. Consumer control also featured strongly with 13% of positive posts. Excitement about the changing environment contributed 9%, closely followed by education.
But the big takeaway in the UK was around what worried consumers and thus weighed on public sentiment. In our analysis, 50% of negative posts in the UK were related to concerns about "data protection" (28%) or "cybersecurity” (22%). Innovation, despite driving large volumes of positive sentiment, also generated 18% of the negative posts in the UK.
The trick with improving sentiment, as noted earlier, may be the presence of a strong regulatory hand to maintain data privacy. That might be especially true in the UK, which has experienced some high-profile data breaches.
Engaging the public on open banking and educating them on security will be key to winning consumer trust. Banks and FinTechs will need to think very carefully about how they communicate with consumers about open banking. For example, instead of framing the question as “Will you share your data?” it is better to ask: “Would you like to see all your bank accounts in one app?”
FinTechs are thriving and innovating
The UK has a thriving FinTech industry, which is generally enthusiastic about the prospects for open banking given regulatory involvement and bank investment.
Among respondents to EY’s UK FinTech Open Banking Snapshot survey, 94% said open banking is a major opportunity, 81% are actively preparing for the opportunities it presents and 29% already consider themselves prepared. Given this engagement, it is not surprising that the UK placed third for its innovation environment, after the US and mainland China.
Open banking also seems to be changing the competitive dynamics in the UK, with more FinTechs open to partnering with financial institutions as a strategy to access customers, thus forgoing the need to build a critical mass of customers themselves. We found that 59% of FinTechs are reconsidering their strategies for collaborating with financial institutions.
Where might that innovation lead? Our snapshot survey found that 23% of FinTechs are prioritizing account and data aggregation. In addition, 16% are prioritizing enhanced credit scoring, intelligent financial management, and new payments.
Open banking’s future
Eventually, open banking should play an important socioeconomic role by helping more vulnerable, underbanked elements of UK society to access and navigate the financial markets. Open banking could be a way to more easily gather the necessary information to open a bank account or qualify for a loan, for example, or offer alternative methods of calculating lending risk. In other words, open banking could be more than just a way to push products, but a way to truly open opportunities for people and help guide good financial behavior.
Open banking was only initiated in the UK at the start of 2018, but the industry is moving forward ambitiously. For example, the Open Banking Implementation Entity (OBIE) and the top nine banks are planning to debut a mobile open banking product in 2019.
Even so, mass adoption is probably three to five years away. That will happen when consumers do not think of these transactions as open banking per se, or even a conscious act of sharing data, but as a natural way to make their lives more convenient. Ultimately, consumers may not be the ones who lead the charge. One of the main reasons that the CMA set up OBIE was to spur competition in the small business market. So it is quite possible that open banking will get its first big boost from the small business segment, which is looking to eliminate manual processes, access working capital, and work more efficiently across borders.