Less than a third (31 per cent) of bankers believe partners in their ecosystem are doing enough to maintain cyber security defences when it comes to customer data in the era of Open Banking, according to a report from Accenture.

The study, based on expert interviews and a survey of more than 800 banking industry professionals, focussed on the potential implications of Open Banking on security in the next three years.

It found that 90 per cent of bankers think customer trust in a bank’s ecosystem of third parties is very or extremely important, while the rapid growth of Open Banking - which mandates banks to open their systems and customer financial data sharing with third parties - will heighten the need for banks to ensure the security, of not only of internal networks, but those of their partners as well.

Just 31 per cent of bankers say they know their ecosystem partners are working diligently to be compliant and resilient with regard to security.

Alan McIntyre, global head of Accenture’s banking practice, said: “Security is only as good as the weakest link in the network of ecosystem partners, and the global trend toward open banking is increasing the spiderweb of interconnectivity among banks and third parties — creating additional points of weakness and vulnerability in banks’ network security.”

He added that 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-centered approach to an active cyber security stance.”

Most banking professionals surveyed believed that the digital demographics information enabled by Open Banking will give them a new way to identify market opportunities and unmet customer needs (cited by 85 per cent) and a more powerful way to understand customers (83 per cent).

Asked for their predictions on the trends that were likely to transform banking in the coming years, 78 per cent said that 5G would revolutionise the banking industry by offering new ways to provide products and services, such as faster video transmission to support seamless delivery of financial advice.

Nearly half (47 per cent) of those surveyed believed that artificial intelligence (AI) will have the greatest impact on their organisation in the next three years, with experts suggesting that banks can reduce costs 20 to 25 percent by augmenting their operations using AI. While more than half of banks are piloting or have adopted AI in one or more lines of business, one in five are not planning on implementing AI or evaluating it for adoption.

Meanwhile, 19 per cent of bankers said they believe that quantum computing will have the greatest impact on their bank over the next three years, while only 17 per cent said the same about distributed ledger or blockchain technology, perhaps an indication that early adopters of blockchain are feeling jaded, Accenture suggested.

McIntyre added: “Technology - including social, mobile, analytics and cloud - has transformed financial services over the past five years and become core to banks’ operating systems. Banks need to evaluate the technologies that are likely to drive the next wave of disruption; we refer to these technologies collectively as DARQ: distributed ledger, artificial intelligence, augmented reality and quantum computing.”

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