OPEN Banking could become a £7.2bn revenue opportunity by 2022 but there is still work to do on awareness, PwC claims.
A report from the consultancy firm, titled ‘How to Seize the Open Banking Opportunity’, found that the use of application programming interfaces (APIs) for account aggregation, better financial management, credit scoring, and integrated lending and accounting platforms would be worth £2.8bn in potential revenue at the end of 2018 and £7.2bn over the next four years.
The report also highlighted the challenges in getting businesses and individuals involved with the new data-sharing initiative, which mandates high street banks to share anonymised customer data with approved third parties.
It warned that a lack of press coverage, bank marketing and few actual Open Banking propositions was hampering awareness.
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Currently, small- and medium-sized enterprises (SMEs) have a greater awareness of the meaning and a better understanding of the potential effects of Open Banking than retail customers.
The report found that 40 per cent of SMEs would be willing to share financial transaction data.
There was more hesitation among individuals, with just 10 per cent happy to share their transaction history and 12 per cent willing to reveal the financial products they had. More individuals – 13 per cent – were willing to share their medical history.
Fintech and peer-to-peer firms looking to make use of Open Banking may also face a challenge as the research found 72 per cent of SMEs were more likely to favour banks for their financial products, with 65 per cent of individuals saying the same.
As propositions develop and the uses of Open Banking become clearer, PwC predicts this will result in more aggregation platforms for a single view of customer financial information across multiple providers, as well as better credit scoring information, more tools to compare products and better offerings to help switch products such as bank accounts or energy bills.
PwC predicts firms will get into Open Banking by either offering an in-house product with their own branding, partnering with fintech firms to provide a limited range of services, or adopting a marketplace model where they focus on the product and allow third-party APIs to find them.
“Open Banking is a potential game changer for individual and corporate consumers,” Jonathan Turner, financial services payments leader at PwC, said.
“It provides an opportunity to transform the public’s interaction and everyday experience with the financial services industry. But there are still many ‘hard yards’ to travel. Few disruptive propositions have been developed so far.
“This is unsurprising given that since the launch of Open Banking in January it remains unclear who needs to get an account information licence or a payments handling licence and how these licences may change in the future.”