Critical views on open banking do not reflect the reality we see, says data aggregator exec
A day after banking leaders said open banking had failed to deliver benefits for customers or enhance competition, a new report from data aggregator Basiq has indicated that open banking’s popularity is steadily increasing and that it leads to more customer connections.
The report has shown that open banking experienced a 30% compounded growth rate on the Basiq platform, with connections rising from 10,400 to 777,000 between October 2022 and March 2024. In the last 12 months, almost 50% of all new connections on the Basiq platform were made via open banking.
Basiq said that contrary to the belief that open banking results in high consumer drop-off, it has found that open banking’s success rate is almost double that of web scraping, with an 80% chance of success compared to 42%. It added that financial institutions implementing more robust anti-scraping measures and heightened business and consumer concerns regarding data security are impacting connection success rates.
The Basiq report also revealed that only 0.17% of open banking connections face disruption after six months, compared to 15% for web scraping, making open banking 88 times more reliable for businesses requiring ongoing connections, such as budgeting or investment apps.
The Australian Banking Association (ABA) and the Customer Owned Banking Association (COBA) recently criticised the Consumer Data Right (CDR) regime in Australia, saying that despite the $1.5 billion the banking industry has invested in open banking, few customers were using or even aware of it.
CDR, commonly known as open banking, was introduced for major bank customers in July 2020, and extended to customers of other banks by July 2021.
Under this open banking framework, financial institutions must share customer and product data related to a range of financial products and services, including savings accounts, investment loans, and retirement savings.
This enabled customers to access and share their financial data with accredited third parties of their choosing. Consumers have full visibility over who their data is shared with and can specify the timeframe and purpose for which their data will be used.
“We wanted to release our findings publicly to challenge the existing negative open banking narrative and provide a more optimistic perspective backed by data,” said Damir Cuca (pictured above), Basiq chief executive and founder.
“While open banking is far from perfect, the highly critical views circulating do not reflect the reality we see. Our platform data and customer feedback tell a very different story — one of growth and success.
“Acknowledging that connection performance is only one factor impacting open banking’s growth, we intend to dive into other key topics, including data quality, in future reports.”
To date, Basiq has facilitated over 900,000 open banking connections between consumers and businesses for budgeting, investing, tax reconciliation, and loan applications. The number of open banking connections is projected to reach 1.3 million by December 2024.
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