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NEW RESEARCH FINDS CONSUMERS KEEN ON OPEN BANKING IN PRACTICE, IF NOT IN NAME

  • Two thirds of people in the UK are still unaware of open banking a year on from its launch across the UK, according to new research from CREALOGIX
  • Gen-Zs and Millennials three times as likely to view open banking positively compared to Baby Boomers
  • Overall, 68 per cent of people would find open banking features useful

Today, digital banking software provider CREALOGIX released new UK consumer research revealing that, more than a year on from launch of the UK Open Banking initiative, consumer awareness remains low. Two thirds of UK consumers stated that they had never heard of the Open Banking initiative, while 1 in 5 consumers had heard of it but could not confidently explain what it is.

Open banking legislation throughout Europe extends a range of new requirements onto all licenced banks, e-money firms, and payment service providers, and implementation within financial institutions has been under way for over two years. Similar research by CREALOGIX conducted a year ago (February 2018), found that less than 15 per cent of consumers knew what open banking meant. This latest consumer survey demonstrates that little headway has been made when it comes to consumer recognition and understanding of open banking, at least in terms of name recognition.

Perceived risk of bank accounts being “open”

With only a minority of consumers able to say what open banking means, expectations are negative, with less than 8 per cent of survey respondents stating they feel it is a good idea. Common concerns focused on security and privacy risks created or increased by open banking, with a third of consumers believing that malicious attackers may use open banking technology to breach privacy or commit fraud.

UK consumers’ negative view of open banking is not consistent across age groups – Gen-Zs and Millennials are three times more likely to think of open banking as a good idea. However, consumers of all ages express concerns about privacy and fraud in relation to open banking, with even more Gen-Zs and Millennials noting perceived threats than Baby Boomers (72% vs 66%).

Consumers keen on useful features of open banking

While a lack of consumer awareness may paint a negative picture in the short term, the research showed strongly positive views when the words ‘open banking’ were left out of questions, and people were simply asked about what banking features they would find useful.

The research showed that more than two thirds of consumers are interested in mobile and digital banking features directly associated with open banking. The most popular features are those associated with aggregation of accounts and convenience in money transfer and management. As these are functions at the heart of open banking legislation and technology, it indicates that the open banking movement is likely to be positive overall for consumers in terms of tangible enhancements rather than in the abstract.

Open banking potentially allows consumers to manage all their financial services brands through any one of them. Open banking features which UK consumers consider most useful-sounding are:

  • Instant transfer of money between different bank accounts, credit, and savings accounts (33%)
  • See all different bank account and credit card balances live in one dashboard (28%)
  • Dashboard showing regular monthly expenses and automatically saves spare money into savings or investments (22%)
  • Convert from pounds (£ GBP) into other currencies at a low rate (21%)
  • Prove income instantly without paperwork when applying for a loan or mortgage (19%)

Anton Zdziebczok, Head of Product Strategy at CREALOGIX UK, said: “This research highlights what sounds like a contradiction from consumers. While they are unaware of what open banking is and, to some extent, are fearful of it, they are keen to get the convenient and powerful new features that are being enabled. Of course, this is not a contradiction at all: as with any technology, consumers are not particularly interested in what it’s called or how it works: they care about how it can make their lives better.”

Jo Howes, Commercial Director at CREALOGIX, commented: “The priority in open banking is actually not to educate customers better because, frankly, they don’t actually care. As mobile app users, we just want to know when specific new features are available and we will judge innovation purely on the basis of whether it makes our lives easier. However, even though consumers are not interested in details of regulation and technology, industry leaders absolutely do need to care. Financial service providers, including banks and building societies, need to ensure they are on top of the latest industry changes and that they are implementing and providing the features that customers are looking for.”

CREALOGIX provides digital banking software to financial institutions who seek to accelerate their time to market with new customer-oriented features and services.

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FINASTRA GLOBAL SURVEY SHOWS APPETITE FOR OPEN BANKING PICKING UP PACE WORLDWIDE

  • 86% of global banks surveyed are looking to use open APIs to enable Open Banking capabilities in the next 12 months
  • Banks believe regulators are stifling innovation: almost half (48%) believe ‘regulation is too tight’ and that there is ‘not enough government or industry support to foster innovation’

Finastra research reveals that 86% of global banks are looking to use open APIs to enable Open Banking capabilities in the next 12 months. In addition, 30% of banks surveyed believe Open Banking is already making a tangible impact in delivering improved overall customer experience. This is against a backdrop where regulation is perceived to be tighter than a year ago and close to half (48%) of those audited believe that regulators are holding back innovation.

The research, which was conducted prior to the Coronavirus outbreak amongst 774 financial institutions and banks across the US, UK, Singapore, France, Germany, Hong Kong and UAE1, shows a maturity of API adoption and calls for the harmonization of regulations between geographies.

Key findings include:

  • Open banking is on the up in 2020 compared to 20192: The percentage of financial institutions looking to leverage open APIs has substantially increased in the US (+23%) and UK (+17%), while Singapore (+1%), France (-1%) and Germany (-4%) are relatively stagnant since our research in 2019.
  • Improvements in the overall customer experience accelerate API adoption: the US (45%), Hong Kong (42%) and France (36%) are leading the way in harvesting this benefit of Open APIs (UAE: 32%; Germany: 20%; Singapore: 20%; UK: 19%). Overall, 41% of global banks say that they are ‘still in the early stages of adoption’, so it’s difficult to measure the impact of Open Banking on their business so far.
  • Regulation is perceived to be tighter than a year ago and industry or government support is required to foster innovation: Almost half of those audited believe that regulations are holding back innovation. 48% state that ‘regulation is too tight’ – 10% more than 2019 – and the same percentage (48%) believe there is ‘not enough government or industry support to foster innovation’, particularly so in Hong Kong (62%), France (50%) and Singapore (49%), compared to 38% in the UK.
  • A call for harmonization: 83% of financial institutions and banks agree that regulations regarding fintech innovation should be harmonized across different geographies.
  • Cost of fintech research and development is of concern in some regions: Cost of R&D in the US, UAE and APAC regions is highlighted, more so than in the UK. (USA: 55%; Hong Kong: 55%; Singapore: 51%; UAE: 46%; France: 43%; Germany: 34%; UK: 33%).

 

Simon Paris, CEO at Finastra said, “It’s encouraging to see Open Banking maturing on a global scale, but it’s still seen by many to be in its teenage years, with scope for creating even greater opportunities. We believe it will be the first step towards Open Finance which will see the next wave of innovation in financial services being created through collaboration on open platforms, like FusionFabric.cloud, using open APIs and open software solutions.

“Currently banks and technology vendors are rightly focused on business continuity and keeping their workforces safe. We’ve also seen many of these firms moving with amazing pace to bring innovative solutions to market, with the help of technology, to support customers in this new environment. As we come through this situation together, we must endeavor to emerge stronger, and it will be interesting to see how Open Banking and collaboration accelerate when this outbreak ends.”

 

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LIBERTY BANK REINFORCES ITS FRAUD STRATEGY TO FURTHER PROTECT ITS CUSTOMERS

Liberty Bank, the third largest bank in the Georgia, has reinforced its fraud strategy to address the rising volume of fraud the industry is currently seeing. The bank has teamed up with long-term partner Compass Plus to launch a new fraud detection and prevention system built on their solutions.

 

Following the completion of the project, which was implemented with technological support from Compass Plus, Liberty Bank can efficiently and effectively monitor and act on suspicious transactions, enabling them to substantially reduce the risk and losses associated with a wide range of fraudulent activities, while protecting their customers.

 

The key drivers for Liberty Bank choosing Compass Plus software were the ability to quickly create their own algorithms to detect and prevent suspicious transactions, the integration of the solution within their existing infrastructure, and the capability to provide services to sponsored banks.

 

“The partnership between Liberty Bank and Compass Plus began in 2005, and the implementation of this project has, once again, demonstrated the flexibility of Compass Plus’ software and its ability to meet the latest industry requirements and trends. With the help of our new fraud detection and prevention system, we are able to combat fraud on a brand new level – not only can we promptly respond to any potential threats, but also prevent suspicious transactions, making our card products convenient and safe for customers,” said Levan Tkhelidze, Deputy Director General  at Liberty Bank.

 

“Our long-term partnership with Liberty Bank is important for us, and for them to choose our software to build their fraud strategy around showcases not only the strength of our relationship, but the reliability and robustness of our solutions. This project has once again confirmed that Compass Plus solutions meet the advanced industry standards and correspond to market conditions, in which the volume of card fraud is constantly growing, and methods used by fraudsters are becoming increasingly complex,” said Dmitry Lenshin, AVP & Regional Business Development Director at Compass Plus

 

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