Open banking platforms balance safety and ease

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Open banking is emerging in all markets, but at different speeds, for different reasons and facing different challenges.

“I think the reason for the emergence of open banking is probably the root of the challenges facing each of these markets,” Simon ArmstrongVice President of Products at entersektsaid PYMNTS.

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.

See also: Study shows highly integrated digital financial services accounts are making headway with consumers

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.”

Read more: Consumers say security and user experience are now equally important when accessing digital accounts

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.”

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NEW PYMNTS DATA: THE FUTURE OF BUSINESS SUPPLIER INNOVATION STUDY – APRIL 2022

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