The Banking Executive Magazine - Issue 150, June 2021

Open Banking tor customer accounts and identify problems sooner. • Rising Competition: Open banking will force large established banks to be more competitive with smaller and newer banks. This will result in lower costs, better tech- nology, and better customer serv- ice. Established banks will have to do things in new ways that they are not currently set up to handle and spend money to adopt new tech- nology. Banks can take advantage of new technologies to strengthen customer relationships and cus- tomer retention by better helping customers to manage their finances instead of simply facilitating trans- actions. • Convenient access to financial data: Open banking offers benefits in the form of convenient access to financial data and services to con- sumers and reducing costs for fi- nancial institutions. • Greater Innovation: Open banking has the potential stimulate greater innovation in the financial services sector and open up competition in the banking industry. It can bring change, opportunity and opens a whole new world of monetary management possibilities. • Higher Banks Credibility: As banks look to secure their future rele- vance in the digital economy, open banking is becoming a key resort for establishing credibility, devel- oping a footprint in the data econ- omy, and creating a stepping stone towards new business models. CHALLENGES While open banking adoption is growing there are rising concerns around security, privacy and fraud. The main concern revolves around how banks can ensure privacy and security once the data is beyond their walls. APIs can be prone to fraud, which is a risk for consumers, banks and third-party providers. Usual cy- bersecurity protocols are not enough and banks need the infrastructure and capabilities in place to identify the third-party API vulnerabilities. A main concern is also data breaches due to poor security, hacking, or in- sider threats that are widespread today as more data is interconnected in many ways. Open banking may have the reverse effect of increased costs due to added expenses from data and network effects. Throughout the Open Banking trans- formation journey, EU Banking Con- sultancy identified six challenges that may reduce scale and speed of open banking adoption. These include: • Open banking development and management • Open banking business develop- ment and modelling • Open banking risk management • Open banking service, support and relationship management • Open banking business planning, budgeting and incentive schemes • Open banking API platform capa- bility development the BANKING EXECUTIVE 12 ISSUE 150 JUNE 2021