New ‘open banking’ fraud protection tool is being rolled out

In the UK, there is a new tool for boosting fraud protection among open banking partners that closely ties in with risk management amid digital transformation.

The Open Banking Implementation Entity (OBIE) was set up in 2016 and is overseen by nine of the largest UK banks.

Its goal is to provide a standardised way to share customer banking information so that other financial institutions can access it.

By obtaining permission, a third-party financial provider can unlock the ability to access the data.

A similar practice is taking place in the US – the aim is to give individuals and small businesses ownership over their data and allow for sharing it with other parties at will.

By utilising it, this could pave the way to better loan deals, to name one example.

But how safe is it?

Those who criticise the concept of open banking are worried about it increasing the risk of fraud and identity theft.

The question remains: in the event of fraudsters being able to access the data due to poor security, should the bank be liable?

Perhaps the customer or third-party provider should take the blame?

FCase, a fraud analytics firm, has warned that legacy fraud detection systems will not be up to the task of managing fraud risks created by this new environment.

To respond to the situation, the OBIE Security and Fraud Working Group created a Counter-Fraud Self-Assessment tool that gives a visual snapshot of fraud controls.

By using it, it will be possible to identify areas of potential risk.

Authorised third parties will be able to access a secure online portal where they are queried regarding their fraud governance, detection, oversight and prevention practices.

Bronwyn Boyle, head of security and counter fraud at OBIE, revealed that the goal is to provide a consolidated view of good practices to defend against broad types of fraud.