You might not be aware yet, but Saturday (13th January 2018) saw the start of Open Banking, and this will probably affect how you manage your money in the future!
What is Open Banking?
Your bank has records of your spending data from the years you’ve had your account with them, and until now that is been between you and them. However, from Saturday, your bank can share this information with financial service providers including technology groups and retailers, but only if they have your consent to do so. This is known as Open Banking!
Why is Open Banking Useful?
Open banking enables a whole new side of the financial world, its goal is to increase competition. Opening up your data to financial service providers means that they can study what and how you spend your money and therefore can make their services tailored to your needs.
Fintech companies and start-ups will be some of the first to apply innovative new ways to manage your money and access services. Increased competition from outside your bank should mean better deals for the consumer.
All banks must be compliant.
Open Banking is backed by new regulations which banks must now be compliant with, although not all regulations have been prepared and therefore the deadline for them has been extended.
What does this mean for Security?
Remember that banks cannot share your data without your permission – there are also controls that can be put into place to protect your data.
Only companies regulated by the FCA can take part in open banking.
However, all data sharing comes with some element of risk, though this can be managed with effective governance.
If you are a Fintech company you might consider ISO 27001, the standard for Information Security or a Pen Testing – an attempt to gain access and privileges to your systems to highlight vulnerabilities.
Perhaps the main threat from Open Banking is the opportunity for fraudsters to phish, or mimick authorised third parties in order to trick consumers into handing over confidential information.
We are used to vetting emails that appear to be from our bank, but the same must now apply to any third party apps or services that you may have signed up to. Find out more information of Cyber Security.