Open banking beginning to excite consumers, but data security fears persist

Consumers need reassuring over data security fears concerning PSD2, but are starting to look forward to reaping the benefits of the new directive, set to come into effect from 2018.

With less than six months to go until the introduction of the Second Payment Services Directive (known as PSD2), new research from ieDigital, a leading provider of financial services technology, has revealed that the clear majority of consumers (89%) are unaware of how this change will affect them.

Designed to increase market competition and improve customer experiences, PSD2 will allow third parties to gain the consent of consumers and access their financial data to provide new, innovative digital financial solutions. However, despite its proposed benefits, the study found that the vast majority of consumers simply weren’t aware of the impending change to law, or how the introduction of open banking could benefit them.

• 66% of respondents felt that the sharing of their data with a third party would compromise online safety.
• 65% are nervous that their accounts will be harder to manage when spread across multiple providers.
• 70% of consumers worry about a lack of clarity on where their data is, or who owns it.
• 72% worry increased data sharing means they will bombarded by unwelcome advertising for third parties.

The benefits of PSD2

Despite these concerns and the lack of awareness around PSD2, after being told of the benefits in store for them, many consumers are excited to see the legislation’s proposed benefits come to fruition. Over a fifth (21%) are looking forward to being able to manage multiple bank accounts from a single app, while 11% expressed interest in receiving objective, third party advice on better managing their finances.

A further 21% believe it will be more convenient than ever to manage their money, and the same amount think it will provide a better overview of their money through digital finance.

“Despite financial institutions’ best intentions, there’s still a lot of uncertainty and doubt around the introduction of PSD2, with consumers either unaware, or actively afraid of the new rules,” said Jerry Mulle, ieDigital sales and marketing director. “Despite these worries, the reality couldn’t be more different: PSD2 has been created with the consumer in mind, and is set to revolutionise the financial services industry, helping provide users with the option to better manage their finances while avoiding debt.

“Of course, security is of utmost importance. And while increased data sharing may set off some alarm bells, PSD2 has many in-built safety functions to ensure confidential information stays safe. Crucially, consumers have to opt in to allow third parties access to their data, ensuring that no one sees financial details without their permission, unless you want them to.

“For financial services organisations, the findings speak clearly: More must be done to educate consumers on the impending legislation, assuaging their concerns and making clear the industry changing benefits that are still to come.”