ALGERIA’S OPEN BANKING SECURITY RISKS NEED ATTENTION NOW
Open Banking is revolutionizing the financial services landscape, introducing new risks that go beyond data security. In this article, we will explore the various risks associated with Open Banking and discuss how organizations can proactively address them.
The Promise of Open Banking
Open Banking has been touted as a means to provide customers with personalized financial services. However, there is a lack of balance in discussing the risks involved. Organizations must identify all potential risks inherent in Open Banking and implement mitigation measures.
Key Risks Associated with Open Banking
- Strategic Risk: The introduction of new players and technologies can disrupt traditional business models and create uncertainty.
- Operational Risk: Increased volumes of data and speed at which it is consumed by Open Banking can lead to errors, omissions, or delays in processing transactions.
- Model Risk: The use of complex algorithms and machine learning models can introduce new risks if not properly validated and monitored.
- Conduct Risk: Organizations must ensure that they are complying with regulatory requirements and industry standards for customer data protection.
- Financial Crime Risk: Open Banking increases the risk of financial crime, such as money laundering or terrorist financing.
- Reputational Risk: The loss of trust and confidence in an organization’s ability to protect customer data can damage its reputation.
The Importance of Proactive Risk Management
To mitigate these risks, organizations must adopt sound risk management practices as an integral part of Open Banking services. This will help ensure delivery of frictionless customer experiences. The reality is that net new risks will be created in proportion to the new types of in-moment services created by Open Banking.
Mitigating Risks through Integrated Player Accountability
- Basic Regulatory Compliance: Organizations must ensure that they are complying with regulatory requirements and industry standards for customer data protection.
- Aspirational Customer-First Principles: Organizations must prioritize the needs and expectations of their customers in all aspects of Open Banking services.
Conclusion
In conclusion, organizations must take proactive steps to address the various risks associated with Open Banking. By adopting sound risk management practices, they can ensure delivery of frictionless customer experiences and mitigate potential losses.
About the Author
Frank Saavedra-Lim is a financial services professional with extensive global experience as an executive and consultant serving the largest financial institutions in North America, Asia, Eastern Europe, South Africa, and Australia. He specializes in the design, planning, and implementation of risk operating models and supporting infrastructure inclusive of data analytics and predictive modeling, process redesign, and risk applications development.
Frank enjoys a track record as a risk technology innovator credited for conceptualizing and developing patented risk technology solutions for Fortune 100 firms. He has been an executive panelist and presenter at numerous events including GARP’s Annual Risk Convention, FICO World, PRMIA Risk Leadership, RMA, and IBM Hawthorne Labs Technology Conferences.
Frank was appointed Risk SME for PRMIA and is the author of a Risk Management of the Future Study, a collaboration with the MIT Golub Center For Finance and Policy.