Firms need more assurance on data security to adopt open banking – YTS

Forty-two per cent of financial services businesses want better support and guidance on data security in relation to open banking, according to research from Yolt Technology Services (YTS).

The open banking provider suggested its findings reveal that firms want better education and training, alongside increased guidance, to help reduce fears around the security risks of open banking adoption.

A survey, conducted among 800 businesses including banks, lenders and retailers, indicated that financial professionals would also like to see this support come primarily from regulators. This ranked higher than taking a “wait and see” approach by allowing more time for open banking technology to develop (39%).

Lack of customer and business willingness to accept risks around data security were the second and third most cited factors threatening the progress of widespread open banking adoption, with 27% and 25% respectively. Over a third of respondents (35%) also believe that an “unfriendly” regulatory environment is threatening the progress of widespread open banking adoption.

YTS chief technology officer, Roderick Simons, commented: “To fully maximise open banking’s potential, we must all do more to educate businesses and consumers about its security foundation.

“Open banking means their financial data is more protected than ever, with the individual in charge of whether their data is shared or not and secure APIs preventing risks from unwanted third-party access.”

YTS has called for the entire open banking and financial services industry to “do more” to empower businesses to adopt open banking technology. The provider suggested this can be achieved by introducing better education as well as accessible, transparent support for firms looking to adopt the technology.

“We want to work with regulators, financial services institutions, and businesses themselves to lead the way in educating, training, and supporting businesses to overcome misperceptions of open banking,” Simons added.

“Doing so will unleash the power of open banking and create huge opportunities for both consumers and businesses.

“Once there is widespread adoption and trust in open banking technology, stakeholders across the open banking ecosystem can then turn their attentions to creating an open finance framework that gives consumers the ability to access their entire financial footprint in one place.”

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