The right balance between robust security and easy-to-use customer experiences, as more markets adopt open banking — which mandates banks to open their systems to third parties — will be critical for bank networks and their ecosystem partners.
The Accenture Banking Technology Vision 2019 report has found consumer demand for customisation and real-time services is driving banks to adopt leading-edge technologies. However, consumers also expect their banks to securely hold their sensitive data and maintain trust as the industry shifts toward open banking.
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The research revealed that while 92 per cent of the bankers surveyed believe customer trust in banks’ ecosystem partners is very or extremely important, only 31 per cent surveyed said they know their ecosystem partners are working diligently to be compliant and resilient about security.
Accenture’s global head of banking practice, Alan McIntyre, said the global trend toward open banking is increasing the interconnectivity among banks and third parties — creating additional points of weakness and vulnerability in banks’ network security.
“Security is only as good as the weakest link in the network of ecosystem partners,” McIntyre said.
“Customers trust their banks and are willing to provide their personal data in exchange for relevant products and services. To maintain this trust, banks must rethink their approach to network security, focusing on the broader ecosystem, not just the bank.
“This will require a shift from a compliance-centred approach to an active cybersecurity stance.”
The Accenture report — which predicts key technology trends in banking over the next three years — found that the primary use case for banks to adopt new technologies is to help recapture customer intimacy, replicating the experience associated with doing business with a small-town bank.
Most bankers surveyed believe that digital demographics will give them a new way to identify market opportunities and unmet customer needs as well as a more powerful way to understand customers.
“Creating a rich view of customers’ digital and technology-driven activities is a powerful tool that banks can use to get closer to tailoring their products and services to the elusive ‘segment of one,’” McIntyre said.
As customer demand and technological innovation push banks to interact with their customers on their terms, customisation and real-time delivery will raise the cybersecurity stakes.
The report highlighted the need for banks to master an ecosystem-dependent business model that not only relies on traditional third-party partners, such as credit bureaus and payment networks but a whole host of new customer-facing and back-office collaborators.
As open banking gains traction and interconnectivity grows, the potential points of weakness and security vulnerabilities also multiply, the report said, noting sometimes the two can be addressed simultaneously.
For example, when the PSD2 regulations enabling third-party payments initiation from bank accounts was enacted in Europe last year, it came with a requirement for strong, two-factor authentication that will go into effect later this year.
While the report acknowledged this attempt to recognise and mitigate the risks associated with the increasing points of connection is a good start, only time will tell whether the European authorities got the balance right between security and an easy-to-use customer experience.
Accenture holds a more pessimistic view when it comes to bank executives fully understanding the downside risk of a far more fragmented and interconnected banking system.
The report shows the lack of focus on this issue is demonstrated by the fact that only 54 per cent banking executives surveyed believe that the security posture of their ecosystem partners is extremely important.
Despite these surprisingly low numbers, the survey indicates there is at least recognition within the banking industry that these issues are increasingly important. Most banking executives — 88 per cent — agree that to be truly resilient, organisations must rethink their approach to security in a way that defends not just themselves, but also their broader ecosystems.
Accenture said it hopes that this report highlights the security issues inherent in open banking before ecosystem partners are the cause of more trust-busting security and privacy breaches in the banking sector.