POSS IB IL IT IES BULLET IN : ED IT ION 2

Open

a revolution stalled

Banking:

Welcome to the second

edition of the Unlimited

Possibility Report.

As Open Banking enters its first

anniversary, we are delighted that

Splendid Unlimited, the agency in the

Unlimited Group who help retailers

and banks design and build new digital

platforms, looked at what’s hindering

its growth and what could accelerate it.

We monitor the state of the nation

every week in terms of benchmarking

how people feel about money, politics,

bills, health, technology and wellbeing.

It provides us with great insight into

how the nation is feeling about certain

trends and the economic climate. If you

would like to ask a couple of questions

to the nation, then please just email

Paul directly on:

paul.bishop@splendidunlimited.com

We hope you enjoy the read.

Launched with the promise of transforming

how we manage our money, Open Banking

could still do so – but only if its benefits are

better communicated and consumers’ real

concerns and priorities are addressed.

Open Banking – an invisible banking reform

that could fundamentally change how we

manage our money, began in the UK on

January 31 2018.

The legislation required banks to open

up their customers’ data to third parties

and let them execute transactions on

customers’ behalf if customers agreed.

The change was conceived to empower

consumers by encouraging bank account

switching but its long-term potential could

shake up the way banking is done in the

UK.

Ahead of the first anniversary of Open

Banking’s introduction, Splendid Unlimited

set out to gauge opinion amongst UK

adults to understand their awareness of

and opinions on Open Banking and its

implications.

02 OPEN BANKING

SO WHAT’S GOING ON

What understanding there is is

simplistic and confused – pointing

to the urgent need for a significant

upscaling of money and effort spent

by Open Banking service providers

on education, marketing and other

communications activities.

We also found dissatisfaction with a

number of aspects common amongst

Open Banking services and criticism

of specific apps – suggesting a need

for Open Banking service providers

to re-think and refine their product

offerings.

Trust was also a key issue. At a time

when trust in financial institutions has

stalled1 and public concern about

data breaches and data security

have never been higher2, it seems

there is a perception that the ‘open’

in Open Banking infers a lack of

security.

Overall, Open Banking providers are

failing to address the lack of trust,

privacy and security concerns. Lack

of information on the benefits of using

these products has meant a limited

uptake of their services to a mere 9%.

These findings highlight a number of

key challenges that Open Banking

service providers must now address.

But they also offer key lessons for the

effective and successful roll-out of

other new technology-driven service

innovations, notably – the further

and more widespread introduction of

blockchain technology – both in the

financial services sector, and beyond.

Almost 12 months

after the launch of

Open Banking in the

UK, our research

found awareness and

understanding of what

it means is shockingly

low with 78% of people

unware it exists.

03 OPEN BANKING

Highlights:

One year in, public awareness is low

– just 22% of participants in our survey

had heard of Open Banking.

Also, just 1 in 5 of those who had heard

of Open Banking knew what it meant

or entailed.

Asked to describe Open Banking in

their own words, participants’ top two

definitions were: “banks sharing your

information” (26%) and “all accounts

in one place” (15%). Beyond this,

understanding was unclear; comments

included “it’s online banking”, “it’s good”

and “it’s easier”.

Open Banking services were used by

9% of survey participants, who were

recruited to be representative of all

GB adults (aged 18+).

The research findings

1 in 4 people

have heard of Open Banking.

4 in 5 people don’t know what

Open Banking is.

Existing understanding

is simplistic and confused.

9 in 10 people don’t

use Open Banking.

04 OPEN BANKING

Widespread demand for financial

advice. Participants expressed a desire

for smart, easily understandable, impartial

yet personalised financial advice to ease

concerns they had relating to planning for

the future, financial stability and shaking

off the reputation of past debts.

Current range of financial services

used are scattergun. Currently,

customers look to a range of sources

for support and use an array of different

tools to manage their money including:

family and friends, government-backed

sites, independent advice, media advice,

comparison web sites; and Google

search terms.

Strong desire for clarity and

simplicity from financial apps.

Amongst Open Banking services users,

the most commonly used were apps that

allow users to view multiple accounts

from different financial suppliers in one

place and apps that help you save /

invest (both used by 5% of total Omnibus

participants). Apps that help you switch

financial providers and apps that put you

in control of your data were not widely

used (both used by 1%).

Attitudes towards and expectations of financial advice:

05 OPEN BANKING

Negative first impressions of Open

Banking due largely to limited

knowledge. Concerns around security

/ safety dominated first impressions of

Open Banking with worries including the

risk personal data might get into the wrong

hands, increased vulnerability to fraud and

unsolicited sales and uncertainty about

how consumers would be protected should

something go wrong.

Respondents were also cynical that Open

Banking was more self serving than beneficial

to customers.

Education makes a marked

difference. When provided with further

information and asked for their second

impressions of Open Banking, participants

were much more open to the idea and felt

reassured it was about more than banks

profiteering.

Disconnect between control

of personal data and privacy.

A disconnect was evident between

concerns about data privacy and being

in control of personal data. While data

security was a big concern, services

offering customers control of their data

was least appealing (unclear/clarify).

Disparity between awareness and

usage. A further disconnect was apparent

between awareness and usage with some

participants using Open Banking apps

without knowing they were related to Open

Banking.

Open Banking features: pros and

cons. Amongst those in the online

community contributing to the research

who were unconvinced by the benefits

of Open Banking, reasons not to use it

included: lack of a sufficiently compelling

reason (the belief that it offered little

benefit if someone’s finances are straight

forward) and the belief they could manage

their financial affairs adequately and

independently already.

Negative experiences reported

by Open Banking users included

being inundated with messages

that aren’t always relevant and

concerns about lack of clarity

from banks concerning who sees

personal data.

Amongst those not using Open

Bank services, the ability to view all

accounts in one place was cited as

the most appealing feature.

Attitudes towards Open Banking services:

06 OPEN BANKING

Clarity, transparency and simplicity

are key attractors. When asked to

comment on specific Open Banking

services they had used, the highest rated

services were praised for their clarity

in showing all accounts in one place,

simplicity, transparency – in terms of

ownership and who can / cannot access

the data and ease of use.

AI, bias and complexity are key

dissuaders. Concerns expressed

regarding specific Open Banking services

related to discomfort with and mistrust of

AI technology being deployed to deliver a

service.

App review. All apps have pros and

cons, however despite hesitations around

complexity HSBC’s Connected Money

came out on top.

Open Banking services – the highs and lows:

07 OPEN BANKING

Yolt – Particpants liked: seeing all

accounts in one place; time and hassle

saved by not having to log in and out of

other / numerous banking apps; spend

breakdown; transparency re. ownership

and data is (not) used.

Connected Money – Participants

liked: the idea of ‘balance after bills’.

Participants questioned: whether their

financial situation was complicated

enough to warrant using the app.

Overall this came out on top.

Chip – Participants concerned

about: siphoning off money for investing,

even if overdrawn, due to possible

impact on charges; AI “managing my

money”. Participants liked: usability;

transparency; perceived independence as

a third party unrelated to the user’s main

account bank.

Bean – Participants liked: ability to

simplify finances. Participants uncertain

about: possible bias in the advice offered;

how often they would use the app each year.

Consents Online – Participants liked:

the proposition of security and privacy.

Participants disliked: complexity of

language, lack of simplicity in the user

experience.

There were pros and

cons to each of the apps,

however despite its

complexity at first view, the HSBC Connected Money

app came out on top

08 OPEN BANKING

Attitudes towards Open Banking services providers:

Lack of trust or faith in who is

best to roll out Open Banking.

When asked who is best positioned to

roll out Open Banking initiatives, opinion

was split between high street banks and

third parties.

Many favoured the roll out of Open Banking

by High Street banks because of their

heritage, legacy, available investment and

legislative expertise. Some viewed this as a

positive demonstration of high street banks’

effort to be innovative.

Those who believed third parties as best

placed to roll out Open Banking initiatives

thought so because their trust in high street

bank was weakened by recent IT fiascos

and data breaches and a concern that they

might be biased towards their own products

and services.

09 OPEN BANKING

3 Steps Open Banking Services Providers Should Take Now

1. Invest more

time and

effort in marketing,

communications

and education

The low awareness and

understanding of Open

Banking and its benefits

(including the belief among

those yet to use it that there

is no sufficiently compelling

reason to do so) should be

of major concern. But the big

shift between first and second

impressions of Open Banking

once people are given further

information is an obvious

and positive opportunity - if

communications strategies

are improved and increased.

2. Address

security and

privacy concerns

head on; be

transparent

Security is a major concern

and potentially if not the

greatest obstacle to increasing

the uptake of Open Banking

services. This must be another

priority in future Open Banking

communications strategies

– along with easing potential

customer fears arising from

mistrust of new technologies

such as AI.

3. Build clearer

differentiation

for products,

brands and service

providers

While there is consensus

around what people want

and don’t want from financial

services advisors to meet their

needs, there is no consensus

around which apps are best

and which service providers

should lead Open Banking

forward. Clearer differentiation

will be a prerequisite for

success moving forward.

Our findings highlight a number of steps Open Banking services

providers could and should now take in order to drive further uptake:

010 OPEN BANKING

ABOUT THE RESEARCH

Splendid Unlimited helps banks and

retailers transform themselves digitally in

order to make the customer experience of

interacting with the brand on and offline,

simple and seamless.

Splendid Unlimited’s findings are taken

from the Unlimited Group Omnibus and

also uses online community methodology.

Unlimited Group Omnibus is a nationally

representative omnibus survey of 2,005

adults from across Great Britain, between

1. https://www.edelman.com/trust-in-

financial-services-2018

2. https://www.welivesecurity.

com/2018/02/15/thales-report-data-

breaches-time-high/

3. https://yougov.co.uk/

news/2018/08/01/three-quarters-

britons-havent-heard-open-banking/

September 28 and October 5 2018.

The figures have been weighted and are

representative of all GB adults (aged 18+).

Twenty-four people were also interviewed

via an online community over the course

of four days. The aim was to interview 24

people who used Open Banking initiatives

but this was challenging, so participants

all had an account with a challenger bank

and were a mix of ages, gender and

socio-economic background.

Get in touchUnlimited Group

Unlimited House

10 Great Pulteney Street

London

WIF 9NB

Paul Bishop I Founder Splendid Unlimited

paul.bishop@splendidunlimited.com

07764 185612

Stay in touch Unlimited_Grp

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ABOUT SPLENDID

Splendid Unlimited is an award-winning

transformation agency who help companies

transform themselves digitally so that customer

experience is better. They help companies design

and build the digital infrastructure for big changes

– like the Open Banking regulations (PSD2) that

took effect in January. They don’t just design and

build the apps that the end consumers use, they

also help companies adjust (whether that’s teams,

processes, operations) so they can manage and

maintain digital change effectively – this often

means parachuting teams in for periods of time.