Open Banking - Risks

• The first risk is related to doing business in general. Newmarket players will affect the operations of banks because they are more technologically advanced – digital and committed to adapt to customer needs with higher speed, better UI / UX, and more competitive pricing. It may result in losing customers for banks if they fail to improve their services.
• Although identity verification and fraud prevention are essential components of both the Open Banking initiative itself and the Open API, there are risks associated with the loss or theft of personal data, data protection violations, money laundering, and terrorist financing. Banks will strive to become fully digital, which will, in turn, create a fertile environment for fraudulent activities.
• Access to customer banking data, such as transactions and balance, has always been on any hacker's wish list. The Open API provides access to customer data stored within the infrastructure and may pose a severe risk to cybersecurity. No matter how banks strive to secure their systems and APIs, data thieves can always find a weak spot. It means that some customer data will be openly available to other parties. And it is not only about compliance with GDPR and PSD2 and scenarios of customers claiming compensation from banks. In addition to financial losses, the reputation of banks may also suffer. As a result, it may directly affect the number of customers and partners who are willing to work with this particular bank.
• The risk of fraudulent transactions is another concern. There is a danger that those who will use the Open API will be able to make unauthorized payments from the bank's customers. In this case, the bank may incur financial losses for every transaction made.