Open banking is a regulatory framework that allows financial institutions to share data with third-party service providers. This enables customers to have more control over their financial data and allows them to use it to compare financial products and services. Open banking also promotes competition and innovation in the financial sector.<\/p>\n\n\n\n
Since its inception, usage has continued to mature and stabilize<\/a>.<\/p>\n\n\n\n Its rapid adoption speaks to consumers’ desire for better control over their financial preferences and an improved digital customer experience.<\/p>\n\n\n\n More openness in financial data has made people worry more about how safe open banking APIs are.<\/p>\n\n\n\n Because they provide third parties with access to sensitive customer data, these factors combine to make them a target for cyberattacks. The data can be used to commit fraud or identity theft. Additionally, open banking APIs may not have the same security protections as traditional banking systems, making them more vulnerable to attack.<\/p>\n\n\n\n With the release of the PSD2 directive<\/a> in the European Union, banks are now required to provide APIs that allow third-party providers access to customer account data.<\/p>\n\n\n\n The PSD2 directive is a set of regulations that member states of the European Union must implement in order to ensure the safety and security of electronic payments. The directive also wants to make the payments industry more competitive by letting new companies access information about customer accounts that banks and other payment service providers already have.<\/p>\n\n\n\n The Open Banking Implementation Entity (OBIE<\/a>) in the UK is driving the open banking revolution. The major UK banks established the OBIE, which is in charge of implementing the UK’s Open Banking standard.<\/p>\n\n\n\n In the United States, open banking is currently evolving, with the Office of the Comptroller of the Currency (OCC) supporting responsible innovation in banking<\/a>.<\/p>\n\n\n\n China’s open banking<\/a> landscape is also expanding. The growth of fintech businesses and supportive regulatory policies are what are driving the development of open banking in China.<\/p>\n\n\n\n Let\u2019s dive into best practices for API security in open banking.<\/strong><\/p>\n\n\n\n API security in open banking is a major concern because of the amount of data that is being shared. This data includes personal information, financial information, and account information. Since APIs are exposed to the internet, they need to have proper security controls in place to protect them from attack. Unfortunately, many open banking APIs lack these controls, leaving them vulnerable to attack.<\/p>\n\n\n\n Another issue with open banking APIs is that they often lack proper authentication and authorization mechanisms. This means that anyone who knows the URL of the API can access its data without having to go through any authentication process.<\/p>\n\n\n\n Add to that, open banking APIs allow third-party developers to access sensitive financial data. If this data is not properly secured, it could be accessed by unauthorized parties. This could lead to identity theft, financial fraud, and other malicious activities.<\/p>\n\n\n\nThe European take on open banking<\/h2>\n\n\n\n
Why is the open banking API a concern?<\/h2>\n\n\n\n