More than 90% of UK consumers with a retirement saving pot have said they would “consider using a digital dashboard to get a consolidated view of their total pensions, savings and investments.” This, according to a report by TISA (The Investing and Saving Alliance) and EY.
The report, conducted in early 2022, surveyed UK consumers “to collect the views of savers.”
While the report shows a strong consumer appetite for open finance solutions, where 94% of participants “claimed they would use Open Finance apps if security could be guaranteed, a number of barriers to more widespread adoption remain.”
Mis-selling and unauthorized access to data are currently “seen as the biggest perceived issues.”
The report also “identified that customers who have access to all the information they need are almost 10 times more likely to switch to better value deals when offered.”
Such deals “include Open Finance tools and other, data-driven technological solutions such as access to comparison sites.”
Harry Weber Brown, CEO at TISA Digital, said:
“Consumers will be able to easily and securely view their financial position by drawing data from multiple providers enabling them take more control of their finances. Financial service providers will be able to build better customer propositions utilizing open data and shared services. This presents revenue generation opportunities and cost savings in data gathering processes for financial services.”
Brown added:
“But we should be clear about the barriers to creating a world-class Open Finance ecology. The security of private data must be assured and significant investment made into designing user-friendly and open APIs. Core principles for any Open Finance solutions must consider affordability, particularly to ensure accessibility for smaller members, a fair allocation of costs and the capacity for ongoing development.”
Brown also mentioned:
“TISA’s OSIP program has been trialing a number of responsible solutions to these questions, and I would like to take the opportunity today to invite the industry to participate in our initiatives and pool resources and information to create a world-leading Open Finance framework, together with the regulators and the Government.”
Jason Whyte, Partner at EY, said:
“The UK was a world leader in Open Finance when the Open Banking regime launched in 2018, but the expected expansion has not yet materialised. With Smart Data included in this year’s Queen’s Speech, however, we expect the legislative and regulatory frameworks to enable – and compel – Open Finance to take shape more quickly, and it is a good time for industry players to engage with the agenda and start building it into their strategy.”
Whyte added:
“While a core group of early movers are now moving into beta testing TISA’s model for Open Finance through OSIP, we realised that many others did not have a strong understanding of what Open Finance is, what it aims to achieve and how it affects the industry. Our work with TISA on this report aims to address this gap and act as a resource for firms as they start to consider the challenges and opportunities that Open Finance will present their businesses.”
The report concluded with recommendations “for the governance model for Open Finance.” The diversity of products and solutions – and of the organizations supplying them – “means that it would be very difficult for a single body to cover the full scope of Open Finance.”
One plausible model is that “all the entities could sit under the umbrella of the Smart Data Function, which would then provide a foundation of interoperability to support existing entities such as Open Banking and the Pensions Dashboard and aid in establishing bodies for Open Insurance, Open Savings, Investments and Pensions and others.”
As an example of the successful use of data by regulatory bodies in its Smart Data consultation paper, the Government “cited a striking statistic about the energy market: following the CMA’s investigation into vulnerable consumers, energy suppliers were required to provide details to Ofgem about their customers who had been on an expensive standard variable tariff for over three years.”
This allowed Ofgem “to create a database of disengaged customers and test interventions to engage them.”
The trial “resulted in 22% of consumers switching to a cheaper deal.” Notably, in the Ofgem trial program for customers of regulated energy markets, “a quarter (25%) of those who used tools to switch providers were over 75 years old.”