Is Open Finance worth getting excited about, or is it just spin?
Sifted, 2020-07-22
Promise
Open banking (allowing users to share their banking info with selected apps for better money management) is not being widely adopted by users.
Open finance extends the list of sharing entities to pension funds, savings accounts, trading apps and other assets. Clearly a more holistic view on one’s finances.
Problems
Consumers are not will to share their financial info for the purpose of “more personalized services”.
Lack of awareness and “what’s in it for me?”
Will the info be actionable? (How much more $ will I retire with if I switch my pension account to another provider charging lower commissions?)
What is the business model? Commissions or customer pays?
Risk of “privacy premiums”: too much or too little data can lead to worse outcomes for consumers (products, terms).
Data protection is paramount.
Regulatory data protection rules are not enough. (Once a leak is there, it’s there)
Yes, users can revoke access to the data. But what if they explicitly sell it?
Will customers believe that their data will only be given to those who they authorize?
And some regulated companies will lose customer data nonetheless.
Target Audience
Younger generation needs scoring (for a loan or lease) more than management.
Older generation needs overview of all their accounts (of which they have more).
Maybe checking / savings / investment / pension accounts are the only overlap.
SMBs may benefit by managing their liquidity and getting financing based off their current position, avoiding loan application processes.
o This all boils down to real-time scoring (a slight variation of existing products).
o … and a bunch of bells and whistles, which are not likely to change consumer behaviour.