Open banking to bring new security risks

The introduction on 1 July of the federal government’s consumer data right through the implementation of open banking will bring with it security risks that banks, businesses and consumers must be aware of, according to SecureAuth Head of Growth for APAC Michael Warnock.

The finance sector has always been a prime target for cybercriminals, and this situation can only be expected to exacerbate under the new regime, he said.

“Banks, fintechs and the data middle-men that we are likely to see come to prominence must have security as a top priority as open banking develops in Australia,” Warnock said.

“However, users are often the weakest link when it comes to security and that reality is not lost on cybercriminals scouting for new opportunities, and along with the benefits, Australians will need to be educated and aware of a potential new avenue for hacking and individual targeting.”

With many people still practising poor password and other security hygiene, this could pose the risk of “catastrophic outcomes”, he said.

Warnock agreed with the ACCC’s decision to delay the start of the regime due to cybersecurity concerns, and said it is essential the system remain vigilant once it is introduced.

“The financial services sector has always been a prime target for cybercriminals because of the compelling data these organisations maintain; opening up this information to third parties has been one of the key sticking points of the regime in Australia,” he said.

“The major banks have already experienced major breaches in the recent past, and it is essential they have the right systems in place to protect consumers.”

Financial institutions must therefore identify and implement the appropriate tools to protect and safeguard the business and its users to reflect the increased risks.

“As the first implementation of the Consumer Data Right, open banking aims to increase competition and ultimately benefit consumers, but by empowering regular Aussies to use and direct their data to multiple organisations, there is also an onus to ensure they are not left vulnerable to cyber threats,” Warnock said.

“The importance of secure digital engagement with customers for financial institutions will continue to grow as mobile, online banking and other services expand in popularity.”

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