Digital finance apps struggle to win public trust

The uptake of Open Banking and digital money management is being held back by a lack of consumer trust and confusion over data sharing, with 83 per cent of UK smartphone owners saying they have not yet downloaded a finance app.

A study by Deloitte, which drew on a YouGov survey of 1,900 UK smartphone owners, found that just over half (51 per cent) would trust financial advice from a human over a similar service provided by artificial intelligence (AI) on a money management app.

Of the 83 per cent of consumers who said they had held off on downloading an app to help with budgeting and savings, 38 per cent said that had not done so because they did not feel they needed one, while nearly a third (31 per cent) said they were wary of revealing their financial details, suggesting that banks and FinTechs have a long way to go to reassure consumers that their data is safe.

Just 12 per cent of those surveyed said they are currently using a finance app, but even amongst those who have embraced the digital banking, confusion remains over who is responsible for protecting their financial data, as well as where accountability lies in the event of a cyber attack or breach.

In the event of a cyber attack on an app that pulls in banking data through Open Banking, almost three in five (58 per cent) of UK smartphone owners assume that the third-party money management app itself would be liable for compensation.

However, in an Open Banking environment, and depending on the circumstance of the breach, liability is more likely to lie with the bank, Deloite stated.

Reluctance to download a finance app differs amongst generational groups, with those in the 18-34 year-old demographic saying they do not have one mainly because they do not think they need it, while the main reason given by those in the 55 year-old and over group for not having an app was their reluctance to share financial data, followed closely by not needing it.

This lack of trust is exacerbated by a current lack of understanding of the limitations and safeguards of Open Banking data sharing, with 37 per cent of those surveyed assuming that giving an app provider their permission would grant them access to all of their financial data, including personal details, transactions and balances on all current and savings accounts.

This was compounded by the 20 per cent said of respondents that did not know how much data would be shared with a financial data app, while 15 per cent believed the app would be able to gather data on current account transactions and payments or current accounts, and nine per cent said it was just personal details and transaction details from their current account and other payments accounts.

In fact, the second Payment Services Directive (PSD2) allows authorised third parties to access transactional data as well as some selected personal information, such as the name of the account owner and the account number, solely from accounts that can be used to make and receive payments.

If customers have multiple payments accounts, third parties need to specify clearly which accounts they would like to access, and receive customers’ consent before doing so.

“Without the same level of human presence as traditional interactions, customers may be less attentive to the risks, and less trusting,” read the report.

It warned that the shift in focus from product to people, and from human to more digital interactions, is taking hold, and takes firms into some nuanced regulatory and technological “hotspots” which require careful consideration and navigation.

As means of reassuring customers, Deloitte advised that firms will need to ensure that transferring or receiving data from other firms does not impair the integrity, accuracy and completeness of the data.

It added: “They will need to implement robust governance, systems and controls to ensure that data is not corrupted, stolen or lost during transfers. Any change in the terms or conditions regarding the processing of data will have to be duly reflected in the app and communicated clearly to customers.”

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