Open banking users can save over 150 hours previously spent on operational tasks for their business, equivalent to more than four full working weeks, according to research from Payit.
The survey, which polled 150 chief executives, decision makers, and chief financial officers from UK businesses, explored the advantages of open banking, including access to real-time financial data and reduced payment processing fees and costs.
Access to real-time financial data empowers businesses to make strategic decisions based on the latest information available. By minimizing processing fees, businesses can effectively reduce costs and improve their bottom line. Furthermore, by diversifying payment methods beyond traditional card networks to include instant payments, account-to-account payments and e-wallets, businesses can expand their reach and cater to a broader range of customer preferences.
As the pioneer of open banking, the UK introduced its Open Banking initiative launched in 2018, setting the pace for other countries in establishing regulations and standards for data sharing within the financial industry. Unsurprisingly, awareness and adoption of this initiative are substantial.
According to findings from Payit, 66% of business leaders said that they were familiar with open banking, while 31% said they had some familiarity.
Security Concerns Remain for Open Banking
Open banking has positively impacted the financial industry over the last few years by facilitating the safe sharing of consumer financial information between third-party financial providers, non-bank financial institutions, and banks.
Despite its advantages, there are still some lingering concerns associate with open banking. These include the risk of bad actors taking advantage of the vast flow of data, leading to potential issues such as fraud, data breaches, and hacking. In fact, 48% of respondents in Payit’s research cited cybersecurity risks as one of the reasons they have not implemented open banking. However, this should not be a stumbling block for a few reasons:
- When making payments, customers only need to provide their login credentials to their bank.
- Open banking apps are overseen by the Financial Conduct Authority.
- Customers authorize when and how long their data can be accessed.
- Data protection laws are enforced. If any unauthorized payments occur, banks will refund customers.
To encourage open banking adoption in the U.S., customers must be informed as to what open banking is and how it works. Most importantly, they know that open banking only happens with their consent. No party has free access to their data without their permission and they can withdraw consent at any time. They are in complete control of their data.
