Open Banking Platforms Strive to Balance security

“I think the reason for the emergence of open banking is probably driving the challenges that are being faced in each of those markets,” Simon Armstrong, vice president of products at Entersekt, told PYMNTS.

In heavily regulated environments, security is mandated, and not everyone gets the implementation right. As a result, the customer experience suffers. On the other hand, security takes a hit in other markets because regulators don’t put the right security guardrails in place.

As the appetite grows for the functionality open banking provides, both challenges will remain at the forefront. Companies will need to balance security with customer experience in order to accelerate the adoption of open banking.

Authentication is a critical part of the equation. It’s important to make it crystal clear and seamless when customers are accessing third-party services through a bank’s website via application programming interfaces (APIs), and to get customer consent.

“Authentication really is the way that we garner that customer consent,” Armstrong said, “making sure that the financial institutions who are opening up these APIs make sure that they’re safeguarded with the right sort of controls before any data is actually shared.”