Published on the 02/08/2018 | Written by Jonathan Cotton

The government may be guaranteeing free and easy access to consumer financial data, but it’s a “thanks but no thanks” from customers…

With competitive pressure increasing, strict new regulations coming into place and small businesses demanding more from their providers, the big players of the Australian banking scene may finally be coming around to the potential – if not inevitability – of the brave new world of Open Banking.

A little hesitation is understandable, of course. This Open Banking business – and the new, fragmented fintech landscape it’s likely to usher in – is a radical shift for the legacy players, and they are currently the canary in the coal mine. But there’s plenty to be gained for those with the will to secure it, not least of all the opportunity to operate less like their low-agility financial monolithic selves, and more like the agile, platform-based businesses they will increasingly be working with.

If only it were that easy. While techies, SMBs and those up-and-coming fintechs wait with bated breath for the Open Banking revolution, there’s still one crucial obstacle to be overcome: the unwilling consumer.

An Open-Banking opinion survey of 2,000 Australian consumers, conducted by research company Accenture in May, has found that two-thirds of customers are still unwilling to share their financial data with non-banking organisations.

“According to the survey, two-thirds (68 percent) of consumers are concerned with how banks manage their money and financial data, following the establishment of the Royal Commission to investigate misconduct by financial firms in Australia,” says the report.

“Despite that, 84 percent would trust only their own bank with their financial data even if a third-party provider were to offer added benefits to secure access to the information.”

In this case, ignorance is not bliss. The majority (53 percent) of respondents also said they don’t understand the potential benefits of Open Banking enough to grant third-party providers access to their data, while almost half (47 percent) said they don’t think Open Banking will deliver enough value to change their banking behaviour. But the biggest concern reported by those surveyed suggests that concerns around the security and privacy of their financial data are the biggest worry, with nearly two-thirds (64 percent) of respondents citing that as the main obstacle to sharing their financial data with third parties.

As usual there is a generational difference at play here too. The research found younger consumers far more willing than older ones to share their data with third-party providers (in line with global attitudes to fintech data sharing which sees 69 percent of respondents unwilling to share their bank account information with third parties).

“Tech firms, online retailers and fintechs currently face an uphill battle competing with Australia’s traditional banks for customers due to the banks’ stronger trust connection with their clients,” said Alex Trott, who leads Accenture’s Banking practice in Australia and New Zealand.

“But an emerging generation of consumers is much more receptive to Open Banking, and as their understanding and awareness of Open Banking innovations grow, it could have a big impact on the financial sector.”

The Government’s recent pledge to improve customer outcomes and increase competition in the financial sector by implementing the recommendations of its independent Review into Open Banking may go some way to changing attitudes around financial data sharing (implementation will start July 2019, paving the way for the introduction of the Government’s Consumer Data Right in the banking sector) but Accenture says the key to widespread Open Banking adoption will be innovation, plus a little bit of patience.

“Traditional financial firms looking to make the leap into the next generation of digital services will have much to gain from launching Open Banking solutions, particularly as a growing number of young customers focus on convenience and speed,” said Fergus Gordon, who leads Accenture’s Banking practice in Asia-Pacific.

“Offering those innovations now will strengthen their position to secure the customers of tomorrow, while also helping to fend off potential rivals eager to take market share away with new services.”