Open Banking is a nebulous term that is more likely to alarm consumers than excite them about the possibilities it can offer, according to new research, which suggests how it should best be packaged and communicated.

At the start of 2018, Open Banking moved from concept to potentially disruptive reality for the financial services sector, as the revised Payment Services Directive allowed individuals to grant companies access to their financial data so that businesses can develop and provide new and improved products and services.

Early developments have been centred around aggregation-type apps – the sort that let users manage multiple accounts from a single entry point without having to remember different passwords and codes – but the future, according to John Turner of PwC, is “far, far bigger than that.

“The possibilities are really broad and most of them haven’t been thought of yet,” he told the MRS Financial Services conference recently. (For more, read WARC’s report: The changing nature of money and what it means for communications.)

Already, there are plenty of possibilities worrying banks, such as third parties being able to make payments on consumers’ behalf. At that point, banks risk being reduced to mere utilities, which may explain some of their alarmist communications on the subject, he suggested.

Consumers, meanwhile, struggle with the idea of open banking. “It’s a nebulous term,” said Richard Gaze of Network Research, which is carrying out ongoing syndicated research into this area.

He identified a consumer need to manage money in a more simple way across accounts and products. “Open banking apps, once they’re explained, provide the solution and answer the need in a lot of different ways,” he said.

But there are barriers to overcome: awareness is “reasonably high but flatlining” at 27%, ditto likelihood to try at 29%; there’s a widespread lack of understanding of what open banking entails and it’s not clear what the benefits are; people need reassurances around security of both their data and money.

People may be unsure about open banking but they are much clearer when talking about specific products, Gaze added, offering up some suggestions on how marketers can approach the subject:
  • highlight tangible, smart benefits, e.g. convenience, savings;
  • highlight security guarantees;
  • recruit advocates, early adopters who will tell friends;
  • ensure the open banking process is seamless and measure the customer experience.

Sourced from WARC