Imagine a future where the consumer has complete control over their financial data, effortlessly sharing it with innovative third-party services to unlock a world of personalized financial solutions. This is the promise of open banking, a movement that's poised to reshape the financial landscape.
Earlier in the year, the Consumer Financial Protection Bureau (CFPB) proposed a rule to implement Section 1033 of the Consumer Financial Protection Act, which would give consumers the right to access and share their financial data. This proposed rule is a significant step towards establishing a federal framework for open banking in the U.S.
Many expect Open Banking to become a gateway for innovation, enabling the development of more personalized financial products and services. However, the rise of Open Banking has also spurred concerns among consumers regarding data privacy and security. Addressing these concerns and building consumer trust will be essential for the successful implementation of Open Banking in the U.S.
Consumer Trust Deficit
The PYMNTS Intelligence report “Consumer Sentiment About Open Banking Payments,” a collaboration with Trustly, revealed that more than half (56%) of consumers who have not used open banking have concerns about data security and trust. This is further supported by data from Edelman that shows 67% of consumers don’t trust fintechs to responsibly use their personal data. This trust deficit poses a significant challenge for the widespread adoption of Open Banking. Consumers need to be confident that their data will be handled responsibly and that they will benefit from sharing their information. Fintech companies and other stakeholders must proactively address these concerns and build trust to unlock the full potential of Open Banking.
Path to Building Trust
Building trust in Open Banking is a multifaceted process that requires a strategic and proactive approach. Here are some key strategies that fintech communicators can employ:
Engage where it matters most.
Communicate regularly on the channels that resonate best with your key stakeholders. For instance, if your target audience is younger, leverage platforms like Instagram and TikTok with engaging, short-form video content that addresses their concerns about data privacy in a relatable way. On the other hand, if you're targeting older consumers, consider informative FAQs published to the brand’s website that clearly outline the security measures you have in place. The key is to understand your audience's preferences and tailor your messaging accordingly, using a mix of channels.
Partner across institutions.
Establish strategic partnerships that showcase your dedication to safeguarding consumer data. Actively collaborate with government agencies like the CFPB or FTC to align your practices with regulatory standards and participate in industry-wide initiatives. Partner with academic institutions to conduct research on emerging privacy threats and develop innovative solutions. Seek out collaborations with reputable cybersecurity firms to conduct regular audits and penetration testing, demonstrating your proactive approach to risk mitigation. Additionally, engage with consumer advocacy groups to ensure your practices are transparent and user-centric. By fostering these diverse partnerships, you send a clear signal that data security and privacy are not just buzzwords but core tenets of your Open Banking strategy.
- Show accountability. Transparency is paramount in the era of Open Banking. Go beyond simple privacy policies and proactively communicate how you collect, store, and utilize consumer data. Publish clear and concise data usage reports, highlighting the types of data accessed, the purposes for which it's used, and the third parties with whom it might be shared (always with explicit user consent, of course). Establish a dedicated customer support channel to address data privacy inquiries promptly and comprehensively.
But it doesn't stop there. Actively seek out independent audits and certifications to validate your security practices. Pursue industry-recognized certifications like ISO 27001 for information security management or SOC 2 for data security, availability, and confidentiality. Regularly conduct internal reviews and penetration testing to identify vulnerabilities and address them proactively.
Furthermore, embrace a culture of continuous improvement. Make it clear to your users that you are committed to evolving your data protection measures as technology and threats evolve. By demonstrating this proactive and transparent approach, you not only build trust but also position yourself as a leader in responsible data stewardship within the Open Banking ecosystem. By following the strategies outlined in this playbook, fintechs can pave the way for the widespread adoption of Open Banking to unlock its full potential for innovation and consumer empowerment.
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Appoint a Partner who can Help
Building trust requires support from a team who has done it before. Consider a partner with expertise in building trust and managing reputation in the financial services industry. Edelman and its sub-brand, Edelman Smithfield, have been studying trust for decades. Our annual Trust Barometer, a global survey of public trust in institutions, provides invaluable insights into the dynamics of trust and the factors that influence it. We've honed our expertise by helping countless financial services companies navigate complex issues, protect their reputations, and build lasting trust with their stakeholders. Our deep understanding of the financial landscape, coupled with our proven track record in trust-building, makes us the ideal partner for fintechs looking to establish credibility and thrive in the Open Banking era.
--Rosie Gillam, EVP at Edelman Smithfield (Rosie.Gillam@edelmansmithfield.com) & Brett Philbin, EVP at Edelman Smithfield (Brett.Philbin@edelmansmithfield.com)