INDUSTRY WATCH
How open banking benefits customers , banks – and cybercriminals
Prakash Sinha , Technology Evangelist and Senior Director of Corporate Marketing at Radware , tells us how open banking comes with a security warning despite having significant benefits for banks , fintechs and consumers .
Australia is progressing steadily with an open banking rollout . The Big Four banks – CBA , Westpac , ANZ and National Australia Bank – introduced open banking in July 2021 , and other banks and financial services are expected to follow in 2022 .
According to many fintechs , however , the introduction is going slower than expected , and they are pushing financial markets to open their banking services online by signing additional data holders .
While open banking has benefits for banks and fintechs as well as consumers , its promise to deliver innovative services and spur competition does not come without security cautions .
Unlike traditional banking where all customer data is controlled by the parent bank , in open banking , customer data is securely exposed to third-party providers via application program interfaces ( APIs ) when consent is provided by the customer .
The sharing of that data in turn creates a broader threat surface that must be protected against cyberabuse and malice . So can open banking be secure ? The answer is yes ; there is a way forward for a secure future for open banking .
Open banking benefits
The benefits of open banking for consumers are clear .
Open banking makes it easier for consumers to shop around for financial products and services . Rather than suffering the tedious process of contacting each lender separately , consumers can give a group of banks temporary permission to audit their financial history and risk profile .
What they get in return is faster , more personalized and more competitive quotes from lenders – and a much easier way to compare product offers .
Open banking also offers advantages to banks and lenders . According to Finextra , there are four major advantages for banks : Increased collaborative opportunities , greater ability to make foresighted decisions , heightened customer satisfaction and improved digital agility .
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