The Future of Open Banking is Blurry for U.S. Consumers

As U.S. open banking initiatives gain momentum, Americans lag behind the global community in awareness, but financial services analyst Charlotte Principato notes it's more important to understand if they are on board with the mission

Getty Images / Morning Consult artwork by Jodie Custodio
  • 45% of U.S. adults have heard of open banking, compared to 56% of adults in the U.K.

  • More than 2 in 5 American adults believe there is a lack of innovation in the financial services industry at present, but they lag behind other countries such as Argentina and Brazil.

  • 63% of Americans worry that increased sharing of data between financial institutions will lead to more fraud.

Open banking is quickly becoming a “when,” not an “if,” for U.S. banks, as the Biden administration calls for improved consumer controls of personal financial data and banks accelerate their efforts to incorporate application program interfaces (APIs) into their services. But Americans’ lack of awareness of the concept, per recent Morning Consult international polling, paired with consumer fears over data privacy, could hinder open banking’s success stateside. 

Fifty-five percent of U.S. adults have never heard of open banking, placing America 10th in a list of 14 countries surveyed.

U.S. Ranks 10th in Awareness of Open Banking, Behind China, Colombia
Respondents were asked if they had a favorable or unfavorable view of open banking
Poll conducted August 2 – 9, 2021, among 17,401 adults from Argentina, Australia, Brazil, Canada, China, Colombia, France, Germany, Japan, Mexico, Singapore, Spain, U.S. and the U.K., with margins of error of +/- 1 point. Figures may not add up to 100 due to rounding.

To be sure, ambivalence and unawareness make up the majority of sentiments about open banking globally, regardless of how advanced the systems are in each country or whether regulation or market served as the primary driver. 

With this in mind, U.S. financial services leaders should shift any efforts from raising awareness of the concept of open banking toward raising excitement about its potential benefits, while also allaying data privacy concerns expressed by a majority of U.S. adults

But most Americans aren’t buying the concepts behind open banking — the promise of increased innovation, personalization and security of financial services products, all predicated upon bank and fintech use of APIs to create secure connections for the transfer of consumers’ financial transaction data. That said, neither are a lot of consumers around the world.

Latin American Consumers See Lack of Innovation in Financial Services. U.S., U.K. Adults Are Less Convinced
Respondents were asked whether they agree or disagree with the following statement:

‘There is a lack of innovation in financial services products and services’

Poll conducted 08/02/2021 – 08/09/2021 among 17, 401 adults from Argentina, Australia, Brazil, Canada, China, Colombia, France, Germany, Japan, Mexico, Singapore, Spain, U.S., and the United Kingdom, with a margin of error of +/- 1 point.

While a healthy share of American adults believe the financial services industry is due for an update — 2 in 5 adults agree there is a lack of innovation in the industry — the U.S. remains one of the least enthused markets for open banking. Overwhelming shares of adults in Latin American countries — where open banking is also in more nascent stages — want industry innovation. 

Americans More Open Than Europeans to Data Sharing in Return for Personalized Services
Respondents were asked to what extent do they agree or disagree with the following statement:

‘I would be willing to share my financial information with a provider that I do not currently use if it meant they would offer me personalized financial management services’

Poll conducted August 2 – 9, 2021, among 17,401 adults from Argentina, Australia, Brazil, Canada, China, Colombia, France, Germany, Japan, Mexico, Singapore, Spain, U.S. and the U.K., with margins of error of +/- 1 point.

Open banking requires a level of data sharing that U.S. consumers might not be willing to provide just yet, although most international respondents polled feel a similar hesitancy with providing financial service companies such access.

Fear of bad actors is at the core of this resistance to sharing data — for Americans as much as for consumers in other economies. A majority of consumers in every country surveyed except Japan believe that sharing data will lead to more fraud, with relatively few disagreeing.

U.S. Adults Among the Most Concerned With Data-Sharing Fraud
Respondents were asked whether they agree or disagree with the following statement:

‘More sharing of data between financial services companies will lead to more fraud’

Poll conducted August 2 – 9, 2021, among 17,401 adults from Argentina, Australia, Brazil, Canada, China, Colombia, France, Germany, Japan, Mexico, Singapore, Spain, U.S. and the U.K., with margins of error of +/- 1 point.

As evidenced by other countries further along on their open banking journeys, strong awareness isn’t a prerequisite for success. As financial services leaders strategize internally on their open banking advancements, they will need to carefully make sure open banking innovations keep pace with consumers’ understanding of them, while focusing on also reassuring consumers of the safety of their data from fraud. 

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