NEW YORK—A new study reveals that 57% of Americans trust financial institutions to protect their data, a finding that PYMNTS suggests is a hurdle for open banking to overcome.
The PYMNTS report, “Can Open Banking Win Trust to Drive Real-Time Payments?” created in conjunction with The Clearing House, shows how data security and privacy remain obstacles before open banking can realize its potential in the American financial landscape, PYMNTS said.
Although 46% of U.S. adults are interested in open banking, adoption lags at a mere 11%, PYMNTS said.
Proposal A ‘Significant Step’
PYMNTS noted the Consumer Financial Protection Bureau has proposed a new rule under Section 1033 of the Dodd-Frank Act that aims to expand open banking in the U.S. This regulation would require financial institutions to share consumer data with authorized third parties while implementing enhanced privacy and security measures.
“Although the proposal is a significant step toward broader adoption of open banking, it has faced criticism from industry groups like The Clearing House Association and the Bank Policy Institute, which argue that it does not sufficiently protect consumer data. Their concerns focus on practices such as credential-based access and screen scraping, which they believe could jeopardize data security,” PYMNTS said.
U.S. And U.K. Skeptical
U.S. and U.K. stakeholders remain skeptical about open banking due to concerns about data security. In the U.K., where open banking has been operational since 2018, 84% of consumers distrust its safety and 72% believe it benefits third-party providers more than consumers, PYMNTS said.
"Additionally, businesses cite cybersecurity concerns as a barrier despite recognizing open banking’s potential benefits. In the U.S., while 60% of Americans view open banking favorably, significant concerns persist about data storage and collection practices," PYMNTS said.