According to a recent survey, 12 million people in the UK have a digital-only bank account and this is set to double in the next 5 years. This trend varies with the demographic of the consumer according to their region, age and gender. Overall however, the sheer enormity and speed of growth in this sector compared to previous years shows the impact of digital banking on the British consumer is huge and set to continue. The pandemic has only contributed further to its rise in popularity. Whereas the younger generations may prefer digital banking primarily because of its convenience and the trust they have in technology, the older generations are turning to digital banking out of necessity.
Open banking is an important part of this trend. The more that consumers get used to the simplicity of managing their finances online, the faster and more straightforward they want purchases and transactions to be. This dovetails neatly with the sizeable ecommerce market in the UK that sits around the £180bn mark and makes up approximately 19% of total consumer expenditure per year. Open banking is helping online retailers to offer faster, more manageable payment options to their shoppers. The consumer needs to give their consent first, but the increased amount of education in this area is helping to allay their fears about data sharing and the security of open banking.
On top of this the fashion for ‘access versus ownership’ in the retail sector reflects a change in consumers purchasing habits. In the UK millions of consumers would rather subscribe to a service than buy it. Open banking helps a consumer get approval for these subscriptions quickly and efficiently. The benefits for the service provider are clear, if a prospective customer can go from viewing an advert to taking out a subscription painlessly, quickly and almost process-free, then the the consumer journey is shorter and the profits higher.
This move away from ownership isn’t just relevant for online shopping. Think about car-sharing and office-sharing services. Any time an asset isn’t being used it can be rented out. This isn’t just about financial savviness, it’s about a new generation that’s socially conscious and wants to avoid waste. We are only on the cusp of these changes, the next five years will see a huge paradigm shift that needs a financial infrastructure that is flexible enough to support it.