The rise of open banking
Security, privacy, transparency and trust are at the center of innovation - open banking is opening doors, enabling connections and driving consumer adoption.
Paving the way for the future
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Open banking and the consumer experience
Seldom is a whole landscape changed by a singular innovation, but when it happens, it’s undeniable. Online retail, smartphones and cloud computing have all profoundly impacted the way our society operates, both in our business and personal lives. Another transformational leap in technology is the use of data and analytics. Large enterprises have used their powerful data and analytics tools to gain insights on business operations, improve efficiency of existing processes and enhance customer experiences. Institutions and businesses that have embraced this have realized significant cost reductions and enhanced revenue opportunities. For too long, individuals and families haven’t reaped the same benefits of using their own data. The technology has been too expensive, or the ability to collect all that data and analyze it has been cumbersome. This is where the advent of open banking and open finance is flipping the data experience. Open banking has put people in control of their personal data in an unprecedented way and unleashed a wave of innovation in the financial sector. Access to rich, accurate financial data via open banking allows for the improvement or creation of financial products. These innovations can help consumers who’ve been left out of a financial system that’s been handicapped by limited data access until now. Open banking is still an emerging technology, but it is already enabling a wide range of financial products and services. They’re transforming how consumers manage their money, prepare their taxes, apply for loans, open accounts, and make real-time payments. They’re even helping them better understand and improve their credit. All of this is leading to more consumer choices and rewarding experiences, along with increased financial literacy, financial inclusion and improved financial fitness. To better understand the near and long-term implications of open banking on financial services and the consumer experience, Mastercard conducted a survey of over 4000 US and Canadian consumers. We asked them to talk about how they feel when it comes to sharing personal financial data, what makes for a trusted experience and more. This research demonstrates that consumers are already connecting their data to conveniently manage their financial experiences, and they’re enthusiastically looking for what’s next. With the rise of open banking, the way we think about money will never be the same.
Key findings from our research
Convenience is a top driver for using technology to manage finances
Use of technology to manage money is mainstream
Eight in ten North Americans are linking their accounts via open banking
New experiences that consumers would link account(s) for
Banks and credit card companies are most trusted
Easing concerns with the linking of financial accounts will help drive adoption
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Over 9 in 10 use technology to manage money. They are using digital apps, products and services for simple financial tasks (i.e., paying bills, banking) however, there is a rising appetite for more complex needs like financial forecasting, investing via cryptocurrency and crowdfunding.
Consumers are looking to save time, save money, improve their financial health and automate the financial process.
Top use cases where consumers have linked their accounts are to automate financial tasks and P2P transactions.
Consumers are also considering new experiences that can offer advice via a holistic financial view, simplify the loan application process automate regular payments.
Trust is likely driven by the fact that both U.S. and Canadian consumers are most likely to believe financial institutions and credit card companies have established longstanding, reliable channels for remediation vs. others.
Alleviating consumers’ security concerns and providing more control of how personal information is shared could help them feel more comfortable in linking their accounts and put consumers in the driver’s seat.
There’s an app for that: Technology is now second nature for managing finances
Technology has become ubiquitous for financial management and North American consumers are confident in using technology to manage their money
Current use of technology to manage money
93%
USA
95%
CANADA
Confidence using technology to manage money
(On a scale from 1-10 where 1=not at all confident and 10=very confident)
59%
Very Confident (8-10)
Black Affluent
73%
Millennials
72%
Affluent
68%
Men
65%
Black
57%
Non-Millennials
54%
Non-Affluent
Women
53%
55%
Gen Z
64%
61%
Non-Gen
Non-Black
Click the required Country
Consumer adoption of financial technology has been fueled by simple financial tasks
However, there is a rising appetite for more complex needs like investing via cryptocurrency, crowdfunding, budgeting and financial forecasting that have accelerated in the last year due to COVID-19
Digital apps, products, and/or services used for any of the following financial tasks (% that currently do this among North Americans)
Paying bills
Banking
Filing taxes
Sending or paying money to friends, family and businesses
Checking or improving my credit score
Express payments for online shopping
Investing
Making and managing a budget
Starting an automated savings habit or saving more of my income
Financial planning/forecasting
Paying off my student loans or personal debt
Securing or refinancing a loan
Buying or selling cryptocurrency like bitcoin
Crowdfunding
82%
80%
62%
56%
46%
44%
39%
36%
30%
28%
18%
11%
% who started using within the last year
27%
29%
35%
33%
32%
31%
51%
42%
22%
23%
24%
26%
Bold Text – Highest percentage of people starting to use in the last year
Younger North American consumers are leaning into fintech more for experimentation and social needs.
Drivers of use
37%
Hover to see results
10%
20%
40%
50%
60%
70%
90%
100%
17%
Millennials 34%
Millennials 29% Gen Z 25%
Save time / less work
Save money
Improve my financial health
Automate financial processes
Because the app or tool is better than anything that currently exists
Try something new financially
Consolidate financial info. for a more holistic view
Social pressure
34%
Millennials 33% Gen Z 29%
Asian 33% Millennial 32% Gen Z 26%
16%
7%
Gen Z 19% Black 18% Asian 14% Millennials 12%
Canada
Silent 77% Boomers 69%
Black Affluent 33% Millennials 27%
Boomers 68%
Asian 53% Gen Z 52% Millennials 50%
Millennial 46% Asian 46% Gen Z 45%
Open-banking is mainstream whether consumers realize it or not
Over three-quarters of North Americans are linking their accounts today, especially younger and diverse consumers and most have a “set it and forget” mindset once accounts are linked
Currently linking financial accounts
Are any of the tools you use for financial tasks connected to your primary financial accounts where you have logged into your online bank account from another app or service or using shared logins across accounts?
81%
77%
94%
92%
Hispanic
89%
88%
91%
86%
85%
Quebec
84%
Asian
A top use case: Sending or paying money to friends, family and businesses
21%
48%
Often
Sometimes
Rarely
(It’s always in the back of my mind)
(When I use it or need to update it, I think about it, but not much more than that)
(Once it was linked, I didn't think about it much)
Rarely or Sometimes
Top use cases where consumers have linked their accounts are to automate financial tasks and P2P transactions
Consumers are considering new experiences that can offer advice via a holistic financial view, simplify the loan application process and provide personalized recommendations.
Have or would ever connect bank account(s) to app / service to…
Automate financial tasks
Seamlessly send money to someone
Get a better holistic picture of my finances
Simplify loan application process
Financial forecasting or scenario planning
Receive personalize financial advice or recommendations
I am not interested in this
I have not done this but would try it
I have done this
74%
69%
52%
Men, Gen Z and Millennials are more likely to connect their bank accounts for each reason listed below.
Consumers are also willing to directly link their bank accounts for regular payments (recurring larger transactions) and digital wallet top-ups
Gen Z and Millennials are the most likely to link their bank accounts to pay for recurring services, retail purchases, and digital wallet top ups vs. other generations.
Have or Would You Ever Connect Bank Account(s) Instead of Credit/Debit Cards For…
41%
Recurring services
(e.g., rent, bills, gym memberships, streaming subscriptions, etc.)
A digital wallet
(e.g., Venmo, Apple Pay, Google Pay, etc.)
Retail stores
(e.g., Amazon, Best buy, Target, Costco, Walmart, etc.)
Pharmacy or medical expenses
(e.g., prescriptions, doctor's bills, etc.)
Travel
(e.g., vacations, flights, hotels, etc.)
Total
Gen X
Boomers
73% of US consumers have / would connect their bank accounts for digital payments
62% of Canadian consumers have / would connect their bank accounts for digital payments
Companies that consumers are most likely to trust with financial data are banks and payment networks
Trust is likely driven by the fact that consumers are most likely to believe financial institutions and payment networks have the most experience dealing with money.
Trust Company with Financial Information (Among North Americans)
Banks
Payment networks/ Credit card companies
Established technology companies
Financial technology companies
Social media companies
Strongly trust (8-10)
Neutral (4-7)
Strongly distrust (1-3)
6%
13%
47%
Canadian respondent
“I think I would trust, just because they always deal with money. They deal with those things. That’s literally what they deal with every single day. They can’t screw it up right?”
5%
58%
45%
49%
19%
9%
Payment networks/credit card companies are trusted most to ensure open banking connections are protected.
While all demographic groups trust credit card companies most, younger generations are notably more open to trusting tech brands
If linking your bank account to another app or service, who would be most trusted to ensure that connection is protected?
Payment networks/ credit card companies
Financial tech companies
Established tech companies
None of these
14%
12%
4%
Alleviating consumer pain points and concerns could help them feel more comfortable in linking their accounts and put consumers in the driver’s seat
Consumers want more control over their data, demand higher security, and would like protections in place to thwart fraud.
Easing Concerns Over Linking Financial Accounts/Sharing Details
15%
If linking them required multi-factor authentication (e.g., typing a password and then entering a code from email or text)
If I had control of how my information was shared (e.g., what details, how often, when to stop sharing, etc.)
If my primary bank endorsed the connection with the third-party provider
If I knew a credit card or established third-party secured the transactions
If linking them required biometric authentication (e.g., use of my fingerprint or face recognition)
If higher-risk transactions had additional security measures (e.g., phone call voice verification)
N/A - Nothing would make me more comfortable
75%
I actively try to protect my private data from companies.
vs. 25% I have given up trying to protect my data from companies.
71%
I take primary control of my financial data and decide when and who has access to it.
vs. 29% Companies primarily control my financial data and decide when and who has access to it.
It’s my job to safeguard my money.
vs. 50% It’s my bank’s job to safeguard my money.
Additional Authentication Steps (Net) 54% - US 42% -Canada
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Implications for Financial Services
As consumers increasingly control and permission the use of their data, industry players will need to rapidly adapt to changing expectations and adopt open banking to offer next-gen experiences.
Open banking empowers consumers to benefit from their financial data through a wide variety of third-party apps and services that utilize that data to offer new money experiences. As consumers adopt and demand more personalized digital tools to save time and money and look to improve their financial outlook, financial services innovators will need to leverage open-banking solutions to drive stronger customer engagement and loyalty. Consumers should be at the center of the data experience and feel connected and in control, so that they can benefit more from using their data. Financial institutions, fintechs and others can utilize open banking solutions to drive innovation such as creating the next personal financial management experience, revolutionizing money movement and payments or developing a digital lending experience. Consumer-permissioned data powered by open banking technology provides:
The tools to build groundbreaking solutions for payments and beyond for customers of financial services providers.
1
A model that can instill trust and place the consumer at the center of control, ensuring greater transparency when it comes to their financial data.
2
A focus on fostering financial inclusion by delivering technology and enabling solutions that help consumers get access to financial services that they did not have before.
3
Mastercard resources
To learn more, please contact your Mastercard account lead - Andy Forrler.
Explore www.finicity.com to learn more about allowing consumers to easily permission data from their bank accounts with Finicity Connect. Shorten the time it takes to verify account details, balances, or create verification reports thanks to a seamless experience permissioning their bank accounts.