Firms ‘missing out’ due to open banking misconceptions

UK firms are holding back from implementing open banking technology due to concerns around the cost of storing and protecting customer data, and “missing out” on opportunities for growth, according to Yolt Technology Services (YTS).

This is despite nearly three million UK consumers using open banking services and the recent news that HMRC has now adopted open banking payments.

A study by YTS, which was conducted among senior professionals across the banking and finance industry, found that 48% believed the main risk involved with open banking technology centred on the cost and liability associated with processing consumer data.

YTS suggested businesses are “prohibitively concerned” by perceptions they will have to take responsibility for large levels of personal and financial data, believing it is costly to both store and protect. The study revealed this was particularly strong in the retail sector, with 61% of those surveyed feeling this way.

YTS chief technology officer, Roderick Simons, commented: “Technical service providers (TSPs) make open banking not only accessible to every business, but also more cost-effective and with less risk than building a solution from scratch.

“It seems that many companies are unaware this choice exists and are therefore missing out on growth opportunities because of their misconceptions and misunderstandings about their role in keeping customer data safe.”

YTS highlighted that the security architecture of the application programming interfaces (APIs) used by TSPs which carry open banking data is safe, and also meets the highest standards of data protection rules.

In the case of YTS, businesses have the option to use the technology under the license of the service provider – reducing the risk to businesses that wish to embrace this technology.

“The reality is that TSPs shoulder all of this risk, with little downside for the adopting business,” Simons added. “It’s clear there’s a knowledge gap which needs to be filled, and it’s not the fault of businesses that they have these beliefs – it’s up to our industry to change them.

“A core objective of our research was to understand how we can do this and how we can help businesses to adopt the technology and reap its rewards. Education and collaboration are at the heart of our approach, and we’re committed to spreading knowledge and educating businesses about how they can transform the way they operate with open banking.”

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