The Digital Revolution Is Being Pioneered by Open Banking Technology; Finds Mastercard

80 per cent of US consumers – and 90 per cent of younger consumers – are already connecting their bank accounts to technology apps; according to Mastercard.

Mastercard’s latest report, ‘The Rise of Open Banking’, demonstrates the ongoing consumer adoption of technology to power smarter digital experiences.

One of the benefits of open banking technology is that it places consumers front and centre of where and how their data is being used to better define the services they want and need.

We’ve seen the industry continue to utilise open banking technology and consumer-permissioned data in a number of ways, including determining access to credit, issuing digital wallets, and in the provision of payments services.

Open banking is also embedded in several areas of daily life, including personal financial management tools, linking of financial accounts and account opening.

According to the report, nine in 10 consumers in the US and Canada are using online and mobile financial applications to manage money, with 82 per cent using it to pay bills, and 80 per cent using it for banking.

Chiro Aikat, Executive Vice President, Product and Engineering, North AmericaChiro Aikat, Executive Vice President, Product and Engineering, North America
Chiro Aikat

“Open banking gives consumers choice by enabling them to use their own data to obtain financial services solutions quickly, simply and securely,” said Chiro Aikat, Executive Vice President, Product and Engineering, North America. “Mastercard plays a central role in this ecosystem as a trusted intermediary and secure data network that powers smarter, more meaningful experiences and empowers consumers to practice good financial habits that enhance their day-to-day lives.”

Accelerated Shift to Digital

The survey uncovered that over the past year consumers have increasingly conducted common transactions digitally. From the respondents, the ability to send money to friends, family and businesses remained the most popular use case, with 59 per cent sayings that they had used digital apps and services as a means to do so. 

Furthermore, 36 per cent of US respondents admitted that they had used this form of technology in this way for the very first time this year.

Also shown in the report was how 28 per cent of consumers had used technology to secure or refinance a loan, whilst cryptocurrency and crowdfunding use cases also started to emerge.

Open banking is at the foundation of many of these applications, where fintech companies, banks and financial institutions are connecting financial data to enable a wide range of financial products and services.

Willingness to Connect Financial Accounts

Critical to driving many, if not all, of these transactions is the ability for consumers to securely link their bank or payment accounts and authorise their financial data to be used in online financial applications.

The report found 74 per cent of consumers in the US have, or have the intention to, consider connecting their bank accounts to financial apps and services to automate financial tasks. 65 per cent of Canadian respondents reported the same intention.

68 per cent in the US and 69 per cent in Canada would do so to easily send money to someone.

Trust in Fintech

Consumers are already connecting their data via multiple platforms to manage finances, and thus make their data work harder for them. Of those surveyed, 59 per cent of US respondents and 55 per cent of Canadians felt very confident about managing money through the use of technology.

Convenience is a top driver for using financial technology, with 59 per cent of consumers in Canada and the US saying fintech saves them time and is less work.

Putting consumers at the centre of how and where their financial data is used ensures greater transparency and in turn helps fintech companies, banks and financial institutions gather feedback, scale faster and create new financial products and services more efficiently.

  • Tyler is a Fintech Junior Journalist with specific interests in Online Banking and emerging AI technologies. He began his career writing with a plethora of national and international publications.