“Open banking security is shared across the customer, the account provider and the authorised service. Clear consent and authentication are central to that model.”
Consent should be specific and understandable
A customer should know which service is being requested, which account is involved and what data or payment action is covered. Consent is not a one-time blanket permission for unrelated uses. The interface should make the provider’s identity and the route to withdraw access easy to find.
For a business, authority matters as much as consent. An employee may be able to authenticate to an account but still lack internal permission to connect it to a third-party service. Treasury and access policies should cover open-banking connections alongside other account permissions.
Authentication remains with the account provider
Strong customer authentication typically combines independent elements from knowledge, possession or inherence. In an open-banking flow, the customer is normally authenticated by the institution servicing the payment account. A third-party service should not ask users to disclose security credentials outside the approved authentication journey.
If a screen or message is unexpected, stop and enter the service through a known route. Zolvat’s fintech fraud-prevention guide offers broader advice on verification and safe payment behaviour.
Treat connected data as sensitive
Transaction data can reveal customers, suppliers, payroll and commercial patterns. Businesses should apply least-privilege access, retention rules and secure integrations. Review the provider’s privacy information, incident channel and subprocessor model before connecting material accounts.
Use only authorised and clearly identified services.
Check the account, purpose and permission before consenting.
Never share authentication codes with another person.
Review connected services and remove unused access.
Report unexpected activity through official support channels.
Security must continue after the API call
Platform teams need secure token handling, permission states, audit records and careful error messaging. Modular Fintech’s API integration services connect these controls to onboarding, ledgers and operational review.
Frequently Asked Questions (FAQs)
1. Is open banking safe for businesses?
Open banking uses regulated access arrangements, customer consent and authentication controls to help protect financial information. However, security also depends on the providers involved, how access is implemented and how credentials and data are protected. Businesses should use authorised providers and review the permissions they grant.
2. What is customer consent in open banking?
Customer consent is the permission given to an authorised third-party provider to access specified account information or initiate a payment, depending on the service. The customer should understand what they are authorising, which provider is involved and how the permission can be managed or withdrawn.
3. How does strong customer authentication protect open banking transactions?
Strong Customer Authentication (SCA) generally requires verification using at least two independent elements, such as something the customer knows, possesses or is. It helps reduce unauthorised access and payment fraud. Specific requirements and exemptions depend on the applicable regulations and transaction.
4. Can customers revoke open banking consent?
Yes. Customers can generally withdraw consent for ongoing account information access through the relevant provider or account-servicing bank. Withdrawing consent prevents further access under that permission, but it does not necessarily delete data already lawfully collected or cancel a payment that has already been executed.
5. Does open banking give third-party providers access to online banking passwords?
In standard secure open banking arrangements, customers authenticate through their bank’s approved authentication process rather than sharing online banking passwords directly with third-party providers. Businesses should avoid services that request credentials outside trusted authentication channels.
