Open banking is emerging in all markets, but at different speeds, for different reasons and facing different challenges.
In heavily regulated environments, security is mandatory and not everyone gets the right implementation. As a result, the customer experience suffers. On the other hand, security is taking a hit in other markets because regulators are not putting the right security guardrails in place.
“Ultimately, I think these challenges will coalesce into one,” Armstrong said.
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Balancing security with customer experience
As the appetite grows for the features offered by open banking, both challenges will remain at the forefront. Businesses will need to balance security and customer experience to accelerate the adoption of open banking.
Authentication is an essential part of the equation. It is important that customers access third-party services through a bank’s website through application programming interfaces (APIs) and obtain customer consent.
“Authentication is really how we collect consent from the customer,” Armstrong said, “ensuring that the financial institutions that open these APIs make sure they’re protected with the right kind of controls before data is actually shared.”
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Older authentication methods were often so clumsy that they deterred consumers from using the services altogether. Thus, the challenge today is to allow consumers to easily authenticate while assuring them that their data is safe.
“We need to continue to look for ways to create this environment of trust with our users while making the experience easier,” Armstrong said.
For example, in a very low friction scenario, a consumer logging into a FinTech provider would receive a message on their phone asking them to approve something and provide a biometric signature.
Create consumer confidence
Banks should implement a seamless authentication journey across every major point of customer engagement, including digital channels such as online banking and banking apps, during payments and when collecting data used in open banking. Fragmentation anywhere will create confusion.
In every channel, consumers want a consistent experience of going through security steps when authenticated. This creates a level of trust.
“At Entersekt, we value the power of trust,” Armstrong said. “With that ability to do great things with the ability to share data and the innovation that’s happening, we think that’s the cornerstone of what needs to happen there. Creating consumer trust is the key to realizing this open banking strategy.”