New Study: Pros Blame Consumer Uncertainty For Slow Uptake Of Open Banking

Open banking in the United States is having trouble getting out of its nascent state, the latest edition of PYMNTS U.S. Open Banking Tracker found, noting that while the tools and tech are there, consumers aren’t ready yet.

The problem, in short, is personal data — how consumer privacy can be maintained safely and securely in a world powered by data sharing to deliver better-connected experiences safely for all players.

And it’s a question for everyone, Megan Crespi, executive vice president and chief operations and technology officer at FI Comerica, told PYMNTS, pointing to the merchants, bankers and consumers all looking to the regulators to set the standards for how businesses and banks can collect and store personal data, because only by understanding the future of data aggregation can the future of the open banking world really begin to get under construction.

“There continues to be … emerging regulatory guidance, all with the goal in mind of ensuring that customer data are protected and we are all in agreement that [this] is the best and highest [approach],” Crespi said. “[How] that will translate into … technology requirements and how we work together in the ecosystem will continue to be worked through in the months and years ahead. But the goal is really to ensure that … the needs of the customer are being addressed.”

The Complicated World Of Consumer Need

The needs of the customers have become an oft-cited guiding light in the emerging connected economy, despite the fact that consumer needs after a year of very fast digital transition can be a confusing landscape.

On the one hand, consumers like being connected — a lot.  That much is made incredibly clear by PYMNTS’ latest Connected Economy report based on a survey of more than 15,000 U.S. consumers, examining how they are using connected technology and the internet in essential areas.

According to the data, some 92 percent of consumers went online to make a purchase, and more of them made online purchases (75 percent) than made them at a physical store (64 percent). Additionally, over two-thirds of consumers went online to make a purchase several times a month, while 86 percent went online to pay a bill at least once and 70 percent did so several times a month.

The profundity of that online shift, the same survey shows, has had an effect on how consumers consider and value their privacy. Connectedness is a boon to consumer convenience — and convenience is increasingly the consumer’s highest value in a digitally-enabled transaction.  This is particularly true when it comes to net benefits to leisure, health and banking, areas where some 60 percent of consumers cite convenience as a benefit of introducing connected devices to their routines.  Banking, notably, also had a time management component, as it leads as the most valuable benefit of being digitally connected, at 58 percent.

Consumers, the data indicates, are aware of the risks associated with connectedness — only 20 percent of consumers said that being connected has improved their privacy and security. But those risks, in most cases, aren’t their primary concern — 84 percent of consumers cited time savings and convenience as a benefit at least once across all pillars of the connected economy, while only 50 percent of consumers cited privacy and security as a concern.

Where Security Concerns Are Really Sticking (And Creating Open Banking Issues) 

While PYMNTS data did indicate that consumers are increasingly willing to make a convenience-for-privacy trade, the data also demonstrated limits in this regard. Consumers don’t love spreading their data out across the whole web, with 60 percent noting that as their top concern about engaging on the internet. 

That concern, the data demonstrates, is increasingly pushing consumers more towards super-apps or portals that could provide more control over their data and their engagements as a single point easier to track and manage.  But that super-app interest is limited in some cases, particularly around banking and healthcare.

Only very highly connected consumers say they’d like to have either of those categories aggregated as part of a single, super portal ecosystem — every other consumer group, on the other hand, isn’t looking to hand over access to confidential financial and health data to be stored in the cloud and commingled with other activities.

It’s not to say that consumers don’t want banking and healthcare to be more efficient or connected, but that their desire for protection and privacy still outweighs their willingness to entangle themselves in a larger single digital ecosystem.

Open baking, as PYMNTS’ recent data and connected economy research demonstrates, still has a ways to go when it comes to the U.S. market.  It may be more connected than ever before and pushing into a consumer base more interested in wider convenient connectedness. But it carries enough built-in concerns about privacy that bringing customers along could still present a challenge.