Consumers Embrace Open Banking Features, Putting Pressure on Banks and FinTechs to Deliver

Recent statements by Michael Hsu, CEO of the Office of the Comptroller of the Currency (OCC), have sparked discussions about the impact of banking and FinTech collaborations on public confidence in the financial services industry, according to PYMNTS. Hsu expressed concerns about the potential «blurring» of lines between banking and commerce, warning that such developments could undermine trust, similar to what happened before the 2008 global financial crisis.

Despite these concerns, recent data shows that Americans’ confidence in the U.S. banking industry has remained steady over the last two years, despite a few high-profile bank failures in 2023. In fact, a study conducted by PYMNTS Intelligence in collaboration with Trustly indicates that most U.S. consumers appreciate the speed and efficiencies that bank/FinTech partnerships are fostering.

Legacy technology still plays a significant role in many banks, limiting their ability to provide the seamless user experience that today’s consumers expect. Open banking, however, allows financial institutions to share customer data with FinTechs, leading to the creation of modern APIs that facilitate faster fund transfers between banks, consumers, and merchants.

The study, titled «How Open Banking Can Provide Fast and Easy Consumer Payouts,» found that a majority of consumers prefer the faster payments enabled by open banking. While 45% of consumers find the current payments process offered by their banks to be unsatisfactory, 92% of those who can complete transactions within 60 seconds find this speed extremely satisfying.

Although only a small percentage of consumers currently experience instant payments, the survey suggests that consumer confidence is not eroding due to bank/FinTech collaborations. Younger consumers, in particular, are comfortable connecting payouts directly to their bank accounts through open banking if it means faster transactions. Additionally, 50% of millennials stated that the availability of open banking connectivity would significantly influence their choice of merchants and providers in the future.