Around two out of three Australians (68 per cent) would use Open Banking to switch banks, according to a new survey by CDR-specialist fintech, Frollo.
The survey found that the most sought-after function of the current Consumer Data Right (CDR) scheme – of which Open Banking represents the first phase – is the ability to switch over payee and direct debit details to a new bank (also known as “bank switching”).
Around a quarter of those surveyed (26 per cent), however, said they would not find bank switching useful.
Three out of five of those surveyed (61 per cent) also valued the potential of accessing a full financial overview – an overview of a customer’s finances, spanning transaction accounts, savings accounts, credit cards, mortgages, personal loans and superannuation accounts.
Younger Australians were particularly enticed by the prospect of such an overview, with around 80 per cent of Generation Zs (up to 24 years of age) and 74 per cent of Millennials (up to 40 years of age) keen to make use of the service. This compares to 61 per cent of all Australians.
Around 58 per cent also saw the value of a streamlined mortgage application process, with customer data, through the CDR scheme, being made readily available to home loan assessors.
Surveyed Australians were also enticed by other streamlined services, including application pre-filling (62 per cent) and quick balance checks (61 per cent), as well as the prospect of getting more personalised advice (57 per cent).
“This research confirms that consumers want the products and services Open Banking enables. Case in point: Two-thirds of Australians want to use Open Banking to switch banks,” Frollo chief information officer, Tony Thrassis said.
“To capture this excitement and make Open Banking successful, organisations need to focus on building use cases that deliver immediate, demonstrable value to their customers.”
However, concerns over data use remain, with customers “hesitant to trust businesses with this data”, the survey revealed. Consumers are particularly concerned over whether businesses are able to keep their data secure and whether they have their best interest at heart in using this data.
There was particular concern around the sharing of data with third parties without customer consent.
According to the survey, 91 per cent rated privacy as an important consideration when sharing their financial data.
Other key considerations for Australians when sharing their financial information are security (88 per cent) and control (88 per cent), as well as transparency around data use (88 per cent).
Banks, nevertheless, remain the most trusted institution within the CDR scheme, gaining the confidence of 51 per cent of those surveyed. This was followed by utility companies (37 per cent), brokers and financial advisers (35 per cent) and lenders (at 29 per cent).
Fintechs and bigtechs were found to be the least trusted institutions on the CDR, trusted by just 27 per cent and 23 per cent of Australians, respectively.
Frollo cautioned that traditional ways of sharing financial data, including the sharing of account credentials or the emailing payslips and bank statements as .pdf documents, raise privacy and security risks, and “leave consumers wondering if their bank accounts are still secure, who has their data and what it’s being used for”.
“With 98 per cent of consumer deposits covered by Open Banking, it’s time to start phasing out risky alternatives like sharing account credentials and emailing bank statements.”
Thrassis added: “Understandably, in sharing financial information trust is a challenge for consumers. For years they’ve been warned about the dangers of sharing their account credentials.”
“This is why government, banks and Data Recipients need to educate consumers on how Open Banking puts them in control of their data. But words aren’t enough, we need to show them they are in control. That they actually decide how they use their own data, who they share it with and for what purpose.
“And where Open Banking is available, we need to get rid of less safe and transparent alternatives like screen scraping.”