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Australians remain hesitant when trusting brokers and financial advisers with access to their data, a survey reveals.
Data revealed in open banking platform Frollo’s latest survey of 1,066 Australians found that 51 per cent of Australians trust their banks enough to share financial information with them by linking their accounts, while only 34 per cent felt the same level of trust in brokers or financial advisers.
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Despite the best interests duty obligation, which requires mortgage brokers to act in the best interest of consumers, coming into effect in 2021, the two biggest concerns consumers had were trust in businesses keeping their data safe and whether they have their best interest at heart.
After years of being warned about the dangers of sharing their account credentials, Frollo CIO Tony Thrassis said sharing financial information is a challenge for consumers.
Mr Thrassis said more education was needed to educate consumers on how open banking works and puts “them in control” of their data.
“Words aren’t enough, we need to show [consumers] they are in control, that they actually decide how they use their own data, who they share it with and for what purpose.
“And where open banking is available, we need to get rid of less safe and transparent alternatives like screen scraping,” he said.
When consumers were asked about six potential open banking cases, the report found most Australians see open banking products and services as useful, with two-thirds linking their bank account to share financial data.
The most useful service was using open banking to switch over payee and direct debit details to a new bank (bank switching) (68 per cent), a full financial overview (61 per cent) and streamlined mortgage applications (58 per cent).
Across the board, the younger demographic was more responsive to the changes open banking can bring, with the majority saying open banking was useful for a full financial overview (80 per cent), streamlined mortgage applications (78 per cent), and 76 per cent said it was useful when switching banks.
On the flipside, privacy and security concerns were less of a barrier for Gen Z and Millennials.
Other insights revealed in Frollo’s report on consumer attitudes, Open Banking – The consumer perspective, found that when it comes to privacy, security and control over how they share financial information, privacy is rated the most important aspect (91 per cent).
This was followed by security, transparency and control over their data which all ranked 88 per cent, while 70 per cent of Australians rated “ease of use” as important, and only 39 per cent said it was very important.
Moves to expand ‘open finance’
As Australians find open banking increasingly valuable, the federal government moves to roll out its data-sharing regime, which it hopes will lift product innovation and competition in financial services.
In its consultation report, it said customers base their decisions on “rules of thumb” or shortcuts, such as choosing a well-known institution or an institution with which they have an existing banking arrangement, which can place non-banks at a competitive disadvantage.
The move called “open banking” will see the Treasury expand the “consumer data right” from banking, energy and telecommunications to additional sectors such as non-bank lending, insurance, superannuation and payments data.
The right allows a customer to order their service provider to give their data to another entity accredited to receive it, who can then use it to price or expand a competitive offering.
[Related: Treasury begins ‘open finance’ consultations]
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