Open Banking Post-Pandemic Growth Driven by Digital Acceleration
Open Banking adoption is growing, driven by the rapid digitisation of finance – according to the data from global information and insights company, TransUnion.
TransUnion’s Open Banking data, summarised in the Consumer Credit 2022 white paper, shows that financial institutions have been experiencing the highest volume of Open Banking transactions, caused in part by banking becoming more digitised during the pandemic.
Shail Deep, chief product officer at TransUnion in the UK, commented: “We know that the main drivers behind Open Banking usage are the ease and convenience of automated processes (51%) and the fact that it is quicker to get a decision on finance applications (51%). Meanwhile, 47% of Open Banking users are motivated by not having to dig out old bank statements to open accounts.
“But Open Banking isn’t a standalone technology. It forms part of the consumer journey, and what UK consumers care most about is its role in providing a faster and friction-right experience, whether providers go out of their way to label it as Open Banking or not.”
Awareness of Open Banking among UK consumers is healthy, with nearly seven in 10 (68%) saying they have heard of it when given a definition of the technology, and one in six among these (17%) saying they have used Open Banking in the past. Gen Z consumers are the most positive about Open Banking, with 42% saying they’ve used it previously and a further 32% saying they haven’t used it yet but would be willing to do so.
Despite increased adoption, there are still challenges among a minority of the population, given that one in five (21%) adults say whilst they know what Open Banking is, they aren’t willing to consent to it.
Getting consumers to try Open Banking for themselves is a key step to tackling this hesitation. Once people use Open Banking, they are overwhelmingly likely to be positive about the experience and of those who have used it in the past, 93% would be likely to use it again in future.
Open Banking helps finance providers to verify applicants who may not have a credit history, or who might have trouble getting credit altogether by enabling a more detailed view of their current finances. The technology can also facilitate solutions that help consumers manage their money and adjust spending habits to better cope with inflationary and cost of living pressures.
Andy Piggott, director of core credit at TransUnion in the UK, added: “Our research shows that the cost of living crisis makes it harder for people in the UK to improve their financial position. That said, swifter and smarter income verification processes can help to navigate the storm. The TransUnion Open Banking Platform makes it easy to authenticate and onboard consumers in an intuitive and secure environment through a seamless screen flow. It helps people to share their financial data to get access to sustainable and affordable credit products that are right for them.”