1 in 4 personal finance managers are still not using open banking – Business Insider

  • One in four PFMs in the UK and the Netherlands don’t use open banking.
  • And forthcoming regulations against screen scraping should push them to transition. 
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One in four from the UK and the Netherlands still use manual entry from users to access their accounts or spending data, such as screen scraping, a recent Yolt Technology Services (YTS) reveals. In screen scraping, a third party creates a mirrored login page and asks the customer to input their login details. The third party does not have to identify itself to access the bank’s system.

personal finance managers' barriers to open banking implementation

1 in 4 personal finance managers are still not using open banking.
Business Insider Intelligence

PFMs use customer data to analyze their finances and offer money management tools, such as automated savings. The data is surprising considering PFMs have the most to gain from open banking: Over 90% of PFMs that use open banking said that it is worth between £1 million–£5 million ($1.3 million–$6.4 million) to their business each year, compared with 70% of respondents across all sectors.

Upcoming regulatory changes will phase out screen scraping, disrupting PFMs that still rely on this less secure and cumbersome process.

  • The PSD2’s Strong Customer Authentication (SCA) standards are about to remove screen scraping. Thirty-five percent of those PFMs that do not use open banking say it is too early to invest in the technology. Yet, the clock is ticking, as SCA requirements become law on December 31, 2020, for the EU and September 14, 2021, for the UK. The SCA will enforce an extra layer of security to login processes, making screen scraping no longer compliant and strengthening the security of open banking communication. PFMs that do not start exploring open banking capabilities imminently and continue to rely on screen scraping will face major service disruptions.
  • Screen scraping limits PFMs’ effectiveness in servicing customers. Twenty-eight percent of respondents said that data privacy is a key concern in adopting open banking. However, screen scraping is much less safe as customers have to share their login details with third parties, which increases chances of data breaches. On the other hand, open banking uses secure APIs to connect to bank accounts and does not require the customer’s password. Screen scraping is also inefficient, taking 5–10 minutes to retrieve data compared to mere seconds using open banking channels.

We therefore expect the remainder of PFMs to transition to open banking APIs, which will help them deliver better personalization and meet consumer demand. PFMs that already use open banking believe improving efficiency and the customer experience are the tech’s top benefits, per YTS. They can automatically aggregate data from customers’ multiple accounts—as opposed to having to ask customers for their login for each account—getting a complete and accurate view of their finances in real time, which in turn can be used to offer more personalized services.

PFMs that use open banking will also likely see accelerated growth: Driven by financial concerns during the coronavirus pandemic, over 2 million UK bank customers now connect their accounts to trusted third parties, up from 1 million in January, as they seek better money management options. Money-saving app Plum’s CEO points to open banking as a key enabler for developing PFM features, and its deposits have increased fivefold between January and June 2020.

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