Nearly three quarters of Brits (72%) have no idea what open banking is, with less than three in 10 ( 28%) aware of the new initiative, which launched in January this year.
Open banking enables banking providers to share information on current accounts with trusted third parties, such as apps and websites, if customers give them permission to do so.
The idea behind the project – which has been spearheaded by the Competition and Markets Authority (CMA) – is that it will stimulate competition by making consumers aware when better deals are available.
At the moment, only current account data is being shared, however going forward it is expected to be rolled out to credit cards, savings accounts and e-money services, such as PayPal.
Account aggregation is regarded as the most innovative service that could come off the back of open banking at 20%, followed by money management (8%), choosing the right account (7%), account management (7%) and buying things (7%).
Interestingly, the survey by YouGov found that older people are most likely to be aware of open banking, with 39% of over 55s knowing about it, compared to just 14% of those aged between 18 and 24.
Even after survey respondents had been given a description of open banking, 45% still did not understand how it could benefit them, compared with just 18% that said they did.
‘More needs to be done to allay consumers’ fears about data security’
It also emerged that people are nervous about open banking and the ramifications it could have for their personal security. More than three-quarters (77%) expressed concern about sharing data with companies other than their own bank. Only 12% said they were happy to share their data if it meant they could access innovative products or services.
Another barrier to the success of open banking is that most people are not actively looking to switch current accounts; 63% said they were happy with their bank, rising to 72% among over 55s.
Commenting on the findings, YouGov’s director of financial research, Matt Palframan says: “The introduction of open banking was hailed as a revolution for the financial sector, however what we’re actually seeing is more of a slow and silent evolution. More needs to be done to allay consumers’ fears about data security while financial service providers will also need to ensure that there are real benefits for consumers who are prepared to share their data in this way.
“It will be interesting to see how things evolve and whether or not a truly innovative product or service can create real disruption in the market and overcome consumers concerns about sharing their data.”