The ongoing economic difficulties has increased the role of data sharing in financial services. However, trust issues remain. Financial Services brands need to ensure they provide transparency and allow consumers to have greater control over how their data is used.
UK Data Sharing in Financial Services – Current Trends
The cost of living crisis and its impact upon household incomes has seen more people shopping around for deals and savings on financial products. This has increased the role of data sharing further, with consumers able to more readily see the most suitable products and gauge their odds of approval. However, only a quarter of financially struggling consumers are comfortable with which companies have access to their financial data.
Willingness to share financial data directly relates to understanding of the benefits and trust in the financial services providers holding and sharing the data. It is important that firms invest in resilient and robust services that are capable of securely managing and protecting consumer data.
Transparency remains vital and there is a clear need for improvement, with only just over a third of consumers thinking that financial services companies are open over their use of customer data. One reason for hesitancy towards sharing data is consumers’ fear of misuse, with third parties potentially gaining access to their financial data without consent. Giving consumers greater control over their data, such as options to opt-in or opt-out of data sharing, can empower them and reduce concerns over privacy.
UK Data Sharing in Financial Services – Consumer Statistics
- UK consumer attitudes towards data sharing in financial services: Only around one in ten UK consumers are very comfortable about companies having access to their financial data.
- UK consumer knowledge of data sharing: Over a third of UK consumers are not very confident in their understanding of how their financial data is being used by financial service providers.
UK Data Sharing in Financial Services Consumer Report – What’s Inside?
Key Topics Analysed in the Report
- Analysis of the regulatory environment and competitive strategies
- Consumer comfort levels around sharing financial data
- Level of consumer confidence in how data is used by financial services providers
- Level of trust in sharing data with different financial services providers
- Types of financial data consumers are willing to share
- Attitudes towards sharing financial data
- Awareness and use of Open Banking
Report Scope
This report explores consumers’ confidence in sharing their financial data (eg payment history, credit report) with financial services providers. The research included in this looks at: consumer trust levels regarding sharing financial data with providers; the types of data consumers would feel comfortable sharing with financial services providers; the motivators to using Open Banking and; attitudes towards sharing financial data.
Meet the Expert Behind the Analysis
This report is written by Lewis Cone. Lewis joined Mintel in May 2013 having graduated from the University of Southampton with a 2.1 BSc (Hons) degree in Economics and writes a range of industrial reports, from occupational health to the house building market.
Open Banking brought new opportunities for consumers to benefit from data sharing. However, with use and awareness remaining low, a fresh approach is required.
Lewis Cone
Associate Director – Financial Services
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Executive Summary
- Key issues covered in this Report
- Overview
- Opportunities for data sharing in financial services
- Educate consumers to improve comfort over sharing data
- Publish regular reports on data usage to improve transparency
- Encourage data sharing to help those most vulnerable
- Market dynamics and outlook
- Smartphones and laptops dominate device use to purchase financial products
- Graph 1: use of devices to purchase financial products, by age, 2024
- Consumer confidence has improved but remains fragile
- Graph 2: the financial confidence index, 2016-24
- What consumers want and why
- People remain uncomfortable over the companies that have access to financial data
- Graph 3: level of comfort about which companies have access to financial data, 2024
- Consumers lack confidence in understanding how their data is being used
- Graph 4: confidence level in understanding how financial data is being used by financial services companies, 2024
- Banks and building societies are the most trusted with financial data
- Graph 5: level of trust in financial services companies with financial data, 2024
- Consumers will consider sharing a wide range of data, with credit reports and payments leading the way
- Graph 6: types of financial data consumers would be willing to share with a financial services company, 2024
- Data breach response is key with the majority saying they would stop using the provider
- Graph 7: attitudes towards sharing financial data with financial services companies, 2024
- Vast opportunities remain in promoting awareness and use of Open Banking
- Graph 8: awareness and use of open banking, 2024
- Financial reward the leading motivator behind Open Banking use
- Graph 9: motivators to use, or increase use, of Open Banking, 2024
- Competitive strategies and launch activity
- The growing use of data is driving innovation in security and digital IDs
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Market Dynamics
- Market background
- Smartphones and laptops dominate device use to purchase financial products
- Graph 10: use of devices to purchase financial products, by age, 2024
- Open Banking broadens product choice for consumers
- Open Banking usage is growing but there remains a need for greater awareness
- A new direction is needed for the UK to sustain Open Banking growth
- Growing fraud activity and complexity highlights need for data sharing guidance and security
- Macro-economic factors
- Inflation has fallen significantly but some households continue to feel the impact
- Graph 11: CPI inflation rate, 2021-24
- Borrowing pressures remain as interest rate cut decision remains on hold
- Consumer sentiment: wellbeing recovery stagnates…
- Graph 12: the financial wellbeing index, 2016-24
- …with consumer confidence remaining fragile
- Graph 13: the financial confidence index, 2016-24
- Regulatory environment
- FCA launches review into Big Tech and data sharing
- The Digital Markets, Competition and Consumers Act aims to enhance consumer protection
- FCA’s Consumer Duty will require a more consumer-centric approach
- The Consumer Duty focuses on four key outcomes
- Committee proposes design of the future entity for Open Banking
- Open Finance taskforce launched to extend Open Banking’s reach
- Increasing sophistication of data breaches providing security challenges
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What Consumers Want and Why
- Comfort with providers’ access to financial data
- Providers must be proactive to boost consumer comfort levels over financial data
- Upfront transparency is vital to boost data comfort
- Engage with struggling consumers to boost trust and highlight the benefits of data sharing
- Consumer understanding of financial data usage
- Additional effort is needed from providers to help people understand how data is being used
- There is particular need to boost understanding amongst older demographics
- Increase engagement with vulnerable consumers to reassure doubts over data use
- Graph 14: confidence level in understanding how financial data is being used by financial services companies – net, by financial situation, 2024
- Trust in sharing data with providers
- Longevity and frequency of use ensure high trust levels in banks and building societies
- Graph 15: level of trust in financial services companies with financial data, 2024
- The importance of trust is a banking has held back challenger banks
- Trust in online payment providers has been driven by the need for secure web transactions
- Buy now pay later brands must boost trust perceptions
- Types of financial data consumers are willing to share
- Consumers need strong reason or the potential for rewards to share their financial data
- Graph 16: types of financial data consumers would be willing to share with a financial services company, 2024
- Highest income earners most willing to share all forms of data
- Strong incentives would be needed to share social media and web browsing data
- Attitudes towards sharing financial data
- Data breach can have severe repercussions for brands with most consumers likely to move accounts
- Graph 17: attitudes towards sharing financial data with financial services companies, 2024
- Providers must regularly update data security tools to counter evolving threats
- Rewards for sharing data can ensure a mutually beneficial relationship
- Graph 18: I should be rewarded for sharing financial data with financial services companies, by age, 2024
- Digital financial data ID could make it easier to monitor what has been shared
- Providers need to improve data use transparency to earn customer trust
- Utilise data sharing with AI to offer free financial guidance for younger people
- Awareness and factors behind use of Open Banking
- Vast opportunities remain in promoting awareness and use of Open Banking
- Graph 19: awareness and use of open banking, 2024
- Providers need to gain trust to boost the move to integrated finance pathways
- Open Banking can benefit consumers at the start of their financial journey
- Graph 20: awareness and use of Open Banking, by age, 2024
- Financial rewards will be important as people realise the value of their data
- Graph 21: motivators to use, or increase use, of Open Banking, 2024
- Promote non-cash incentives to gain further engage younger customers
- Offer cash incentives, product guidance and faster processes to engage over half of consumers
- There is scope for huge Open Banking growth if providers take the right approach
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Innovation And Marketing Trends
- Competitive strategies
- Mastercard launches new Open Banking solution with Atomic
- Scottish Widows introduces new Open Finance features to its app
- Fiserv secures data sharing agreement with Akoya
- Fiservgrants users access to Plaid’s network
- Apple introduces Open Banking integration for Wallet
- Launch activity
- Mastercard enhances data security through new account verification solution
- Financial services providers tighten fraud protection services as scams rise
- TABBx aims to improve payment request sharing via TABBit
- Lloyds Bank releases new Digital ID app with Yoti
- Zurich introduces new video messaging service, ‘Hello Zurich’
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Appendix
- Report scope and definitions
- Market definition
- Abbreviations and terms
- Methodology
- Consumer research methodology
- TURF analysis – additional data
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