The Criticism Against Open Banking and Why It Should Be Embraced

Our Head of Product explores criticism aimed at open banking, asking if banks are creating unnecessary barriers in their customer journeys.  


Open banking is a flop!

In 2021, Starling Bank’s CEO, Anne Boden branded open banking as a flop. She asserted that the technology is too expensive and ‘clunky’, arguing that some businesses struggle to make money from it. According to VERDICT, she made the statement to MPs on the Treasury Committee, claiming ‘insufficient demand and lacklustre services have turned the open banking rollout into a failure.’

Everyone is entitled to an opinion and this certainly created a lot of debate in the ecosystem.


Is open banking criticism driven by fear?

Some of the criticism we are seeing is not unlike the emergence of ‘computerphobia’ in the early 1980s. According to The Atlantic, the fear of computers took many forms, including people feeling threatened, worrying that they can be ‘replaced by a machine’ or worse, become a ‘slave’ to technology. It’s worth noting that the mention of this phobia in books has dramatically declined since the 90s.

Similarly, some predicted mobile phones would not take off. Yet, fast forward to now; we cannot be without them. With change comes fear, anxiety and even hostility. Eventually, you just can’t fight it. Jeff Bezos famously said, ‘What’s dangerous is not to evolve.’ Consider what the world would be like if we did not evolve and just played it safe.


Why criticism isn’t always a bad thing…

It’s fair to say that open banking has seen its fair share of critics since it was mandated in 2017. Nonetheless, few can argue that since it came into force the number of active users has grown steadily.  

‘With over 5 million active users since its introduction that is more than some banks have in account holders.’ 

There are differing views as to how we should measure the success of open banking, which has often led to some criticism. In my opinion, this criticism should be seen as a positive. It can be the result of different interpretations of what the technology should be. And let’s face it, if you’re not getting criticism, you’re not doing enough!  

What is happening with open banking is making some within the ecosystem feel uncomfortable, so not all of the criticism is inward-facing. We all know that data is king and many businesses have invested a significant amount of time, effort and cost into capturing it, maintaining it and keeping it locked away.


Improving awareness

With so much investment made in open banking technology along with the possibilities it brings, the biggest gap is educating the end-user and promoting its existence. This includes better signposting within apps, in-branch/stores, and within the customer journey itself. This is where banks can play a key role.  

A good example of this was when I was in my local town and decided to test one of the high street banks on their open banking knowledge. I saw no signposting or promotional material, so I asked the staff working there if they had heard of open banking. They hadn’t…  

To keep it simple, I explained one of the basic benefits of open banking, which was account aggregation. After explaining how you could see all your bank accounts across different providers in one banking app, they looked perplexed. 

When I demonstrated what I meant by using my own banking app, they thought it was amazing and something that their customers would find beneficial. 


Why make it hard for customers?

Signposting online is no better, which of course is where most of us use banking services. Any open banking information is not easily accessible. If you do find it, understanding what it is and its benefit is either unclear or unnecessarily lengthy.

The terminology used is rarely consistent. Some providers refer to it as ‘Add an account from another bank’ or an ‘Open Banking Data Sharing’ option. Even then, the explanation is often long-winded and confusing.

With different customer journeys and messaging, it’s not surprising that both in-branch staff and customers may not understand the technology and the many benefits that come with open banking. This question remains, ‘Why make it hard for the customer?’ Could it be that banks purposely create barriers?  


Sharing the opportunity

For customers to really see the benefits of open banking, more needs to be done on the signposting, as well as the education of its existence. Only then will we start seeing the real value of open banking. 

When you consider some of the opportunities that come with open banking, it isn’t always about the new and innovative products or account switching, it can also be about financial inclusion. This goes back to my point regarding why some people criticise it.  

One of the many benefits that come with open banking is the granularity of data and this allows businesses to do business better, including banks. 

For example, where a customer was once seen as being outside of a certain criterion, the real-time granular data that’s available allows businesses to reassess that risk and rethink their product offering. This can result in loans being given to businesses previously seen as high-risk, or credit cards issued to customers previously regarded as outside the eligibility criteria. 


Developing the technology

Open banking as it is today is still in its infancy, but maturing at pace. Businesses spent many years building models and segmenting customers. Changing this mindset isn’t easy. The real-time data alone provides so much insight that businesses require time to make sense of it; only then can they power new or personalised products. 

The full potential of open banking has yet to be realised and FinTechs have been the driving force behind the ability of businesses to understand and take advantage of the benefits it brings. Therefore, educating people about its benefits will always play a key role in adoption from both a business and end-user perspective. In the last few years, it is evident that more businesses and consumers are already starting to embrace its use.  

There will always be those laggards that are late to the party.

It is just a matter of timing, but technology is advancing all the time and consumer behaviours have changed significantly in the last two years. It will be interesting to watch the business adoption race play out.

Maybe those laggards are playing smart and waiting for the next phase in the open banking journey, open finance. With its extension of open banking data including such things as savings, pensions and insurance, this could indeed be a tactical delay. One to watch! 



With the momentum achieved so far, I believe this year will see significant growth. It will lead to more data-driven products and services, where businesses start to pilot new offerings. These will be small steps but important ones as they learn from and develop the data available.

Although I don’t expect the criticism of open banking to go away, I would like to see banks make more of an effort in promoting its existence and benefits. Surely customers and members deserve transparency.

“Education is the most powerful weapon which you can use to change the world.” -Nelson Mandela 

With the increased cost of living having a great impact on so many people, now is the time to do more. It’s the time to help those in need get a better service from their bank or building society. It is their data, after all.

If this has raised a few questions or you would like to explore open banking, then please do get in touch. We have the knowledge, product, team and experience to get open banking data and payments working for you.