Mastercard releases The Rise of Open Banking report

Mastercard’s The Rise of Open Banking report reveals that open banking is allowing people to have control over their personal data while still extracting value from it. 

According to the report, while still an emerging technology, open banking is enabling a wide range of services such as changing how consumers manage money, open accounts, apply for loans and make real-time payments. 

Open banking is a banking practice that provides third-party financial service providers access to consumer banking, transaction, and other data from banks and non-bank financial institutions through the use of application programming interfaces. 

Craig Reiff, vice president of core products and open banking at Mastercard Canada, said open banking is “all about unlocking the potential of data.”

He said open banking allows consumers and businesses to take their data and get value as well as control it. 

According to the report, open banking is already mainstream. Based on a survey of 4000 U.S. and Canadian consumers, over three-quarters of North Americans, especially younger consumers, are linking their accounts today. And 82 per cent of Canadians reported that after connecting their bank accounts, they only sometimes or rarely think about it, illustrating confidence in open banking. 

While businesses may not fully understand what open banking is all about at the moment, Reiff said this hesitancy is expected and won’t stop businesses from adopting the technology. 

“It’s not that consumers and small businesses know exactly what open banking is, it’s about them providing permission to use their data to gain access to a service.”

For example, Reiff compared trusting open banking to the way people trust their phones. 

“You’re willing to give [your iPhone] permission to use your camera because you’re going to get value out of it with QR codes or a selfie. It’s very much a give and get value,” he said.

While the COVID-19 pandemic can be credited as responsible for accelerating digital adoption in general, as well as in the fintech world, Reiff said he sees this acceleration continuing even after the pandemic due to the benefits it brings. 

“It’s all about convenience, convenience, convenience, as well as providing you with the actual products or services that are going to meet your needs.”

The report also reveals how Millennials and Gen Z’ers are leaning into fintech more than other generations. While this is expected, as younger generations have grown up with technology and are therefore more comfortable with it, Reiff also proposes another reason for this.

“They’re also more willing to try new things. They are more willing to give a new service a try versus an older demographic that is holding on to what they [are used to].”

This seems to check out as the report states that younger generations are interested in fintech more for experimentation and social needs. 

When it comes to introducing open banking and fintech to people who aren’t completely comfortable with the service, Reiff suggests a slow approach.

“Give them opportunities, try and ease their way into it. Don’t go zero to 100.”

The report also discusses the trust consumers have in companies when it comes to providing them with their payment information. With no surprise, 56 per cent of respondents strongly trust banks with their financial data. The majority of respondents also strongly trust payment networks, established technology companies and financial technology companies. However, when it comes to social media companies, 51 per cent strongly distrust the platforms with their payment information. 

The Harris Poll on behalf of Mastercard conducted an online quantitative survey in the U.S. and Canada among 4000 respondents ages 18 and older between May 26 and June 15, 2021. All participants were screened for credit card use with readable sample by gender, generation, affluence, ethnicity, fintech openness and adoption, card ownership, major bank relationships, region, etc.

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Jim Love, Chief Content Officer, IT World Canada

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Samira Balsara
Samira Balsara
Samira is a writer for IT World Canada. She is currently pursuing a journalism degree at Toronto Metropolitan University (formally known as Ryerson) and hopes to become a news anchor or write journalistic profiles. You can email her at [email protected]

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