An Empirical Exploration of Key Factors and Barriers to Consumer’s Adoption of Open Banking Applications

Abstract

Open banking is a major innovation in financial industry and has been driven by technology developments, as well as legislation for financial data. Payment Systems Directive 2 (PSD2) has been a key initiative for European Union, aiming to increase competition and innovation among financial industry, by allowing the entry of third party licensed providers to the financial market. This is feasible by relaxing the data restrictions and ownership, and passing control over consumers, who may select among a wide set of service providers, and not only the traditional banks. Although, PSD2 and third party applications are in place, there seems that consumers do not adopt them widely. Also, it is not evident, if PSD2 has enabled the desired level of competition and innovation for the benefit if consumers. Due to lack of relevant works, this study, aims to explore the key factors that affect consumer adoption and at the same time examine the PSD2 effectiveness in the creation of a new landscape. A number of experts were interviewed and a qualitative analysis was followed. Results, indicate that key barriers to adoption are lack of awareness, data privacy and value proposition, while PSD2 seems that it has increased competition and innovation. Further studies can shed more light on those findings, in a wider perspective.