Americans receptive to open banking: Axway survey

The results of a recent Axway survey on open banking in America bode well for its adoption stateside. More than half, 55%, have heard of open banking, with 32% believing they have a decent understanding of it.

The awareness rate rises from 48% in 2021. Also on the way up are Americans’ attitudes about the movement toward open banking. Today, 60% believe it’s a positive development, up from 51% in 2021.

Axway is a global API management and integration software provider with 11,000 customers across 100 countries. The survey polled 1,000 American adults about their expectations and top concerns about how companies use, track and handle their personal data.

Education key to adoption

One clear result is that all industries must better educate consumers about how they protect their data. More than half of Americans, 56%, don’t know where their data is stored; 87% wish they knew what data companies collected on them.

Banking and financial services firms are tops in terms of how much consumers trust them to protect their information. The bar is low, however, at 57%. Healthcare and life sciences are at 42%, insurance at 33%, and transportation and logistics at 16%. A solid majority of Americans 57%said they would stop doing business with companies suffering a data breach or cyberattack until the issue had been resolved.

“It’s encouraging that consumer trust seems to be growing when it comes to open banking and the API technologies that underpin it because trust is critical to banking,” Axway SVP of financial services and open banking North America Laurent Van Huffel said.

Open banking attitudes evolve

While the European Union transitioned to open banking seven years ago, Van Huffel said the results were mixed. Adoption was strong in the United Kingdom and Nordic countries but weaker elsewhere.

Van Huffel said attitudes are beginning to change. Banks in the Middle East, Brazil and other areas are beginning to see leveraging open banking as necessary and positive.

He believes once open banking takes root stateside, there will be more competition and less regulation. The CFPB announcements sparked a movement.

Some expected results of open banking

The positives will come. Van Huffel says it will bring control to the consumer and end practices like screen scraping, replacing them with much safer APIs. It’s also healthier for the banks, as Van Huffel estimates some use up to 30% of their computer resources on screen scraping.

Laurent Van Huffel said education will be key to the adoption of open banking.

Van Huffel said the industry is preparing to use FDX APIs. They expect the CFPB to dictate that, as FDX is essentially the only game in town.

The United States should embrace open banking better than much of the EU. Trust levels are higher in the U.S. Beyond that, there are few clues to look for from the European experience.

One clear necessity is that the industry must better educate consumers about the benefits and security measures associated with open banking. Van Huffel cited Brazil’s trust framework with its open banking initiative. Aggregators are part of the trust framework. Customers must have the ability to give consent. Institutions can also revoke consent to partners they deem unreliable.

In the end, consumers will be winners. So will those financial institutions and fintechs not afraid of jumping on the bandwagon.

“The banks can create a digital profile of the customer and then understand why … they didn’t take a loan with a bank where they have a checking account,” Van Huffel said. “It’s going to create a more open field, better competition. It will also level the playing field for smaller banks and credit unions so they can better compete. Banks can better partner with fintechs to open new services to their customers. Integration is going to be a lot easier and cheaper.”

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  • Tony Zerucha

    Tony is a long-time contributor in the fintech and alt-fi spaces. A two-time LendIt Journalist of the Year nominee and winner in 2018, Tony has written more than 2,000 original articles on the blockchain, peer-to-peer lending, crowdfunding, and emerging technologies over the past seven years. He has hosted panels at LendIt, the CfPA Summit, and DECENT's Unchained, a blockchain exposition in Hong Kong. Email Tony here.