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Is Open Banking the future of consumer fintech or the latest opportunity for digital fraudsters and data hackers?

If you haven’t come across the term Open Banking before it is a new and secure way to give providers access to your financial information so they can find better deals on products and services for you and your business. 

Open Banking can also give you a better understanding of your financial position and suggest ways to make your money work harder by finding alternative solutions offered by fully regulated financial service providers.

It is widely considered to be the most exciting development in financial services in years and looks set to take fintech out of industry and into the home.

The benefits of Open Banking are clear. 

Using Open Banking will allow you to see all of your finances in one place.  This will help you budget and find the best deals and products for what you want to achieve, safe in the knowledge all of the service providers (TSPs) are regulated and their access points – usually an app – will be secure.  You’ll be able to make secure payments direct from your bank account and, as Open Banking can read those accounts, the recommendations you receive will be based on your spending habits rather than forcing you to conform to the providers’ chosen pricing structures.

Open Banking has also been designed to keep users’ data as safe as possible.  As opposed to a lot of apps and websites which use ‘screen-scraping’ (you enter your login details and passwords so the app can login to your accounts to do what it needs to do), Open banking won’t ask for your access details and you’ll only ever share those details with your bank.

So far so good …

… not quite; we think Open Banking poses 3 very real threats to consumers:

  1. Authorised push-payment (APP) scams

As with all online financial service offerings there is already concern over the potential opportunities Open Banking offers the digital fraudster. 

Which? Magazine in particular has already voiced its fear publicly.  They fear Open Banking could lead to a higher number of authorised push payment (APP) scams.  In an APP the scammers trick account holders into making a payment or transfer by pretending to be their bank or even the police or an industry authority.

In case their fears are recognised, Which? has started to lobby the Payment Systems Regulator to give victims better protection as, as things stand, banks can refuse to refund the money lost if the victim willingly shared their details with a firm that isn't authorised and regulated by the FCA or a European equivalent.

  1. Data security issues

In the wake of GDPR Open Banking has raised critical questions about data privacy.

As we have seen regularly with the recent Equifax hack not even the most highly regulated organisations are immune from cyber-attacks.  Given the volume of highly sensitive personal data that will be involved, the TSPs involved will - in the words of the Open Banking Implementation Entity have enormous pressure to ensure “any personal data they process, store or transfer is appropriately and securely protected”.

But while those sentiments are as worthy as they are true with such a complex and wide-ranging group of providers sharing the data, surely the potential for losing personal data because of error, attack or fraud has to increase? 

  1. Consumer consent

Consumers have to know exactly what they are giving their consent for so that they understand which details they are giving, who will have access to them and how those third parties will use those details particularly if a variety of apps/interfaces and methods of data sharing are involved. 

As specialists in all types of digital fraud we are here to help should you feel your experience of Open Banking has placed your details and your finances at risk. 

If you have lost money because of an authorised push-payment scam, if you are having difficulties trying to reclaim money following a fraud, if your personal data has been compromised or misused or if you feel your data has been used in a way you did not agree to, we can talk you through what you need to do next. 

If you’d like to discuss any issues that have arisen as a result of Open Banking or misuse of any type of fintech, please call us today on  020 7792 5649 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it.. 

We will help. 

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