Open banking could lead to a wave of challengers

The introduction of open banking rules across Europe could result in a wave of challengers, according to professional services company Deloitte.

The Big Four firm believes that technology companies, price comparison websites and retailers could become banking brands as a result of open banking rules changing customers’ perception of banking from a closed model, where the majority of services are provided by one institution, to an open model, where many services from a number of providers can be accessed.

Trust

The comments from Deloitte come after research showed that many consumers who use mobile banking would be prepared to share their data with traditional retailers.

Research from YouGov revealed the reasons as to why consumers would switch to a mobile-only institution, with 58 per cent out of the survey of 2,000 UK adults saying that the ability to complete more banking activities through an app would be the main driver for switching.

The survey also found that consumers who use mobile banking are placing their trust in other providers, with 49 per cent saying that they would trust a mobile app from a digital payments provider for managing their finances and 43 per cent saying that they believe a mobile app provided by a traditional retailer is trustworthy.

Opportunities

Deloitte Head of UK Banking Neil Tomlinson commented: “Open Banking could ultimately challenge who owns the primary customer relationship. Competition is also raised when personalised comparisons between providers are made clearer. However, whilst the threats are greater than ever for banks, so too are the opportunities.”

He added that those banks that embrace it have the potential to create revenue and new, highly tailored products, services and solutions.

To read other stories about business, accountancy, finance and entrepreneurship, visit the LSBF blog.

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