Chris Pash* reports on a new survey showing that concerns about security and privacy could be the biggest obstacles to Australians’ adoptingof Open Banking.
Australians aren’t quite ready to start sharing their financial data with fintechs and app developers wanting to disrupt the banking industry when Open Banking regulations start from July next year.
A survey by professional services group Accenture of more than 2,000 Australians found that two-thirds (66 per cent) are unwilling to share their financial data with non-banking organisations.
Open banking, which from next year requires banks to make available credit and debit card, deposit and transaction account data, is expected to drive competition in financial services and create new and more efficient products.
The results of the survey show the challenge that fintech companies and other digital players face in taking market share from traditional banks.
However, the research also found younger consumers more willing than older ones to share their data with third-party providers.
The results are in line with a similar survey Accenture conducted last year with UK consumers that showed 69 per cent would not share their bank account information with third parties.
The new Consumer Data Right will give Australians access to their banking, energy, phone and internet transaction data.
The financial services sector will be the first with Open Banking, which will allow Australians to grant third parties access to their financial data.
According to the survey, two-thirds (68 per cent) are concerned about how banks manage their money and financial data, following the establishment of the financial services Royal Commission.
However, 84 per cent still say they would trust only their own bank with their financial data even if third-party providers offered added benefits, compared with 59 per cent of British consumers.
“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,” says 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.”
“Traditional banks cannot afford to rest on their laurels, as these new rules open the door to new competitors targeting young Australians.”
The survey found those younger than 35 were 4.5 times more likely than baby boomers to say they are aware of Open Banking and willing to share their data with third-party providers for better services and other benefits.
The younger consumers were also eight times more likely than baby boomers to say they would use social media or an online merchant to initiate payment transactions.
The biggest concern with Open Banking centres on security and privacy, with nearly two-thirds (64 per cent) citing that as the main obstacle to sharing their financial data with third parties.
More than half (53 per cent) say they don’t understand the potential benefits of Open Banking enough to grant third-party providers access to their data.
And almost half (47 per cent) don’t think Open Banking will deliver enough value to change their banking behaviour.
* Chris Pash is a Sydney journalist and author. He tweets at @TheLastWhale.
This article first appeared at www.businessinsider.com.au.
