Australians wary of open banking

The promise of open banking in Australia could be threatened by poor awareness and an unwillingness among consumers to share data with non-financial organisations, a new survey indicates.

The study from professional services company Accenture found that 83% of consumers are not aware, or are unsure, of recent regulatory changes setting the groundwork for open banking, such as the pending introduction of the Consumer Data Right.

Under the new rules, consumers will have greater access to, and control over, data held on them by businesses, starting with the financial sector. This is expected to enable the introduction of new and more tailored financial services by, for example, allowing mortgage providers to use banking data to offer the best rates to potential customers.

But the survey found that 66% of Australian consumers are unwilling to share their financial data with non-banking organisations. And 84% would only trust their banks with financial data even if third parties offered added benefits.

This holds even though in the wake of the Royal Commission on misconduct in the banking sector, 68% of consumers are concerned with how banks manage their money and financial data.

Consumers’ biggest concerns with open banking revolve around security and privacy of financial data (64%), while 53% stated that they do not understand the potential benefits of open banking enough to grant third-party access to their data.

But the survey also indicated a greater receptiveness to open banking among younger respondents, with Generation Z and millennials being 4.5 times more likely than the older population (31% compared to 7%) to be aware of open banking and willing to share their banking data.

“Tech firms, online retailers and fintechs currently face an uphill battle competing with Australia’s traditional banks for customers due to the banks’ stronger trust connection with their clients,” Accenture’s Banking Practice Leader for Australia and New Zealand Alex Trott said.

“But an emerging generation of consumers is much more receptive to open banking, and as their understanding and awareness of open banking innovations grow, it could have a big impact on the financial sector. Traditional banks cannot afford to rest on their laurels, as these new rules open the door to new competitors targeting young Australians.”

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