Securing The Future Of Open Finance
The world of finance has changed dramatically over the past few years. From consumer relationships with banks to the software financial institutions (FIs) are deploying to create a seamless experience for customers, those operating within the banking industry have had to adapt accordingly. With this adoption offers new opportunities, but also new challenges.
The correlation between advancing technology and cyber security concerns is not new. In recent years, vulnerabilities have often been exploited as quickly as new technologies are rolled out, and while FIs are far wiser to the risks than they once were, there is still more that can be done.
A key example of this is the continued rise of Open Banking on a global scale. Through Open Banking initiatives, Fintechs can utilise relevant consumer data, direct from banks and non-bank financial institutions, through Application Programming Interfaces (APIs) to build improved customer offerings. In turn Open Banking offers customers the opportunity to access these enhanced services across many different institutions and service providers, thus creating hyper personalisation and an improved user experience. While Open Banking has the potential to revolutionise the financial industry, recent research from Curity shows that concerns such as data sharing are prevalent amongst financial institutions, in part due to the introduction of several data protection regulations.
Common Concerns & How To Address Them
While 71% of businesses plan to adopt Open Banking in the next 18 months, the same number have concerns around security issues and the largest concern these businesses have on a global scale is related to outdated systems. Businesses need reliable systems in place in order to manage the data sharing process, to introduce new applications and services that require a robust technology support system.
Without these systems businesses risk falling behind their more advanced counterparts and will lose customers who can find better experiences elsewhere.
To the benefit of many businesses, Open Banking is built on data protection regulation on a global scale and requires financial-grade security protocols to be in place. OAuth 2.0 and OpenID Connect, while considered complex, support businesses in offering robust security frameworks that deliver Open Banking at no cost of safety to customers.
By implementing financial-grade security, businesses can gain peace of mind that the systems they are building are appropriate for their consumer audience.
OAuth 2.0 is a crucial authorisation framework specifically designed for API security. It allows unrelated servers to authorise access without sharing the original log-on credential, and without giving third-parties full, permanent access. It offers businesses the flexibility to add additional layers on top of its framework, such as OpenID Connect.
OpenID Connect is built as an identity layer that sits on top of the OAuth 2.0 protocol. It is the leading industry standard for cross-domain single sign-on and identity, and is known for its ease of use for web, mobile and script users who wish to request and receive information about authenticated sessions and end-users. By using JSON Web Tokens, and sitting atop of OAuth 2.0, it is considered API-ready, and feeds vital information back to businesses by showing who is logging on, and how regularly. Its main benefit is that it is “oven-ready” meaning businesses aren’t faced with surprises or additional add-ons due to the standardised set-up, instead operating as a standard protocol on how to authenticate log-in attempts, and how these results are presented.
Paying Attention To Financial-Grade Security Is Key
Other concerns businesses have when it comes to Open Banking are around managing external third-party data providers and legacy systems. We know that ignoring these concerns and not effectively deploying the appropriate technology to manage them can have catastrophic consequences, in particular, increasing the risk of data breaches.
Businesses must ensure they are paying attention to financial-grade security, as well as regulatory requirements in order to maintain customer relationships and build their business acumen. In doing so, this should give businesses peace of mind about their handling of customer data.
This will also provide organisations with the tools necessary to manage the Open Banking adoption and implementation, thus improving their offering to customers and addressing a key business concern.
Jacob Ideskog is CTO at Curity
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