Fraud
Fraud costs the UK around £1.3 billion annually. What can the open banking ecosystem do to help tackle fraud at source?
Andrew Bonsall
Co-Founder & COO, AperiData
As an AISP we believe open banking’s account information services (AIS) play a critical role in fraud prevention by securely aggregating and analysing financial data. Once consented, AIS enables a comprehensive view that helps institutions identify unusual or potential fraud patterns. For instance, sudden high-value transactions or unexpected activity in bank accounts can all signal potential fraud and raise red flags.
Through data analytics and advanced machine learning models, we can monitor account behaviours and detect deviations from typical patterns. These insights enable rapid responses to irregularities, minimising the risk of fraud.
Additionally, AIS enhances security through account verification. It allows users to confirm account ownership and reduce the risk of impersonation. Furthermore, it enables cross-checking of financial data, such as balances and transaction histories, ensuring consistency with declared income or financial position.
In summary, AIS supports a data-driven, proactive approach to fraud prevention. By leveraging secure, aggregated financial data, it enables monitoring, detection, and swift responses to fraud risks, offering robust protection for users and financial institutions alike.
Humera Yakub
Head of Fraud, Pay.UK
Open banking offers great advantages to the payment ecosystem, including creating better customer experiences via a single platform, for example, to access multiple financial services. It also provides individuals with more control over what data they want to share and with whom.
However, along with this comes its own challenges where vulnerable individuals are socially engineered to share data with bad actors causing them great financial loss, which can take an emotional and mental toll on victims. The open banking ecosystem can be used to work more closely with telecoms companies and social media firms for cross-industry data sharing given the number of frauds being triggered via these sites is on the rise.
More work can be done to increase customer awareness with data being used to provide effective warnings to consumers while they are at the decision making stage, of accepting the sharing of their personal data with third party firms, or at the time of a payment being authorised.
Christian Delesalle
Head of Participant Support, OBL
Although open banking transactions have a significantly lower fraud rate by volume compared with other payment types, financial crime remains a priority across the ecosystem, particularly authorised push payment (APP) fraud.
In December 2024, we published the Open Banking Financial Crime report, analysing six months of fraud data from the account servicing payment service providers (ASPSPs) which represent 60% of the market. It is the first time that such a rich dataset and insights have been gathered specifically relating to open banking fraud, and our analysis also incorporated fraud data on other payment methods from the UK Finance Half Year Fraud Report 2024.
The report also offers insights into concrete measures that could be taken to help prevent fraud.
The industry is already taking many active measures to tackle fraud across various payment methods, and this report is a great base to build upon in 2025. OBL is committed to the prevention of fraud and will continue to bring the ecosystem together to collaborate on the prevention of open banking fraud, particularly as open banking use expands.
