Newly-published data from the international payment service provider and direct bank card acquirer ECOMMPAY has highlighted the concerning fact that only 14% of consumers ‘completely understand’ Open Banking; with even fewer businesses grasping how the technology could help them expand their operations.
The term ‘Open Banking’ describes the practice of banks and third-party financial providers securely accessing sensitive data regarding consumer banking and financial activity.
Introduced back in 2018, Open Banking makes it easier for consumers to view their finances, take out loans or pay for things online, while businesses also benefit from faster payments, more information and understanding of their customers, and greater opportunity to innovate by adding more revenue streams via apps and other financial products; all whilst paying less for services.
Overall Open Banking has the potential to create an entirely new relationship between consumers, businesses, and banking by enabling secure and consented data sharing between banks and third parties.
ECOMMPAY’s recent study found that 28% of consumers have ‘no idea’ what Open Banking is and how it is used. A further 20% stated that they were a ‘little confused’ about the term and its uses. Similarly, 3 years after the launch of this system, 10% of business leaders still don’t fully understand what Open Banking is, or how it could benefit their business. With the latest Open Banking enforcement deadline fast approaching, the research shows how the UK must improve its knowledge and awareness around Open Banking technology if it wishes to maintain its position as a global leader in the sector.
The research, which was completed in March 2021, was included as part of ECOMMPAY’s latest whitepaper, entitled ‘Beyond the pandemic: The outlook for Open Banking’, which provides an analytical overview of the current payment landscape, data on changing consumer and business behaviour, how Open Banking fits in and the key learnings for businesses. The whitepaper is built on insights compiled from two separate surveys: one of 1,002 UK consumers and one of 500 business leaders in the UK; which were conducted by ECOMMPAY in collaboration with Censuswide.
Generational Disparities and Slow Business Uptake
Younger people have a better understanding of Open Banking, with approximately a quarter (24%) of 25-to-34-year old’s stating that they completely understand Open Banking, compared to only 7% of over-55s. Even worse, 40% of over 55s said they had no idea what Open Banking is.
Furthermore, only 36% of business leaders surveyed said that their company had adopted Open Banking before 2021. An additional 32% said that while they haven’t implemented Open Banking thus far, they would like to this year.
These insights demonstrate how the UK still has a long way to go on both implementation and education to maintain its position as an Open Banking leader. To accommodate this, ECOMMPAY has announced that it will offer two months of free ‘Open Banking: Advanced’ processing from 1 September to 1 November 2021.
The open term contract is available for businesses with a turnover of €50,000+ per month and covers all expenses, including prime costs.
Changing Checkout Preferences
The report also provides insights regarding the changing preferences of consumers in relation to checkout experiences. In a world where consumers are used to instant access and personalisation in most facets of life, they want their payments to be the same.
Almost three-quarters (71%) of consumers would be ‘very’ or ‘somewhat’ likely to abandon their purchase if their chosen checkout method was not available. One in five consumers also said that the payment process is ‘very’ important in the brand experience, with a further 50% stating that it’s somewhat important.
Speaking on the report’s release, Paul Marcantonio, Executive Director UK and Western Europe at ECOMMPAY remarked, “Technological innovation and social change is taking place at breakneck speed, and it can be hard for businesses and consumers to keep up. The lack of understanding and slow implementation of Open Banking products shows the need for further education, and that’s what we’ve provided in this whitepaper. This will ensure that businesses and consumers of all types will be able to take full advantage of Open Banking’s benefits.”
The whitepaper is matched by the timely launch of ECOMMPAY’s second Open Banking offering – Open Banking Advanced, which enables third-party providers to access banks’ data to provide payment initiation through API connections. Consumers will be able to connect to over 4000 banks in more than 28 European countries, while merchants have access to a pre-funded (EU and GBP currencies) sub-account under ECOMMPAY, meaning the end-user customer can clearly identify the merchant when receiving funds from a payout or refund.
The feature consolidates multiple payment methods to make reconciliation processes easier and faster for the merchant, and minimises bank charges by pooling multiple fund settlements into one daily transfer to the merchant, maximising their profits and enabling better control of their funds.