What’s happening? Banks are coming under fire for weak security controls which are leaving consumers more vulnerable to spoofs, scams, and hackers.
The State of the Internet report from cloud service and security provider Akamai Technologies warned financial institutions (FIs) that as open banking begins to proliferate in the US, they must take application programming interface (API) security more seriously.
Elsewhere, UK banks aren’t taking full advantage of resources that can prevent their customers from falling victim to authorized push payment (APP) fraud, per FinExtra.
Fraud in the US: According to the Akamai report, as US banks increasingly work with third-party fintech providers via API connections, their API security is weakening or not keeping up with scammers’ tactics.
APIs power open banking: In partnering with fintechs, banks rely heavily on APIs to create quick and easy connections with third-party providers. The practice is common in the UK, where open banking is part of a national mandate. US banks aren’t yet required to implement open banking solutions, though requirements are likely coming.
But many US banks have already felt the pressure from consumers to engage in these partnerships.
Fraud in the UK: Consumer banking industry group Which? is sounding the alarm against UK banks, claiming many are not fully utilizing the resources available to them to protect consumers from the rampant APP fraud in the country.
APP fraud is fraught: The acceleration of APP fraud in the UK has caused industry groups to label the scam an epidemic.
The big takeaway: Innovative technology and financial solutions have revolutionized the industry, providing consumers with countless resources for improving their financial health. But fraud is an inevitable part of tech development, and it’s bound to worsen and become increasingly sophisticated. It’s imperative that banks, fintechs, and other financial institutions work together to strengthen security controls and prevent scams before they happen.
This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.