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• Unveiling GA4 Issues : 8 Questions from a Marketer That GA4 Can’t Answer

  8 janvier 2024, par Alex

  It’s hard to believe, but Universal Analytics had a lifespan of 11 years, from its announcement in March 2012. Despite occasional criticism, this service established standards for the entire web analytics industry. Many metrics and reports became benchmarks for a whole generation of marketers. It truly was an era.

  For instance, a lot of marketers got used to starting each workday by inspecting dashboards and standard traffic reports in the Universal Analytics web interface. There were so, so many of those days. They became so accustomed to Universal Analytics that they would enter reports, manipulate numbers, and play with metrics almost on autopilot, without much thought.

  However, six months have passed since the sunset of Universal Analytics – precisely on July 1, 2023, when Google stopped processing requests for resources using the previous version of Google Analytics. The time when data about visitors and their interactions with the website were more clearly structured within the UA paradigm is now in the past. GA4 has brought a plethora of opportunities to marketers, but along with those opportunities came a series of complexities.

  GA4 issues

  Since its initial announcement in 2020, GA4 has been plagued with errors and inconsistencies. It still has poor and sometimes illogical documentation, numerous restrictions, and peculiar interface solutions. But more importantly, the barrier to entry into web analytics has significantly increased.

  If you diligently follow GA4 updates, read the documentation, and possess skills in working with data (SQL and basic statistics), you probably won’t feel any problems – you know how to set up a convenient and efficient environment for your product and marketing data. But what if you’re not that proficient ? That’s when issues arise.

  In this article, we try to address a series of straightforward questions that less experienced users – marketers, project managers, SEO specialists, and others – want answers to. They have no time to delve into the intricacies of GA4 but seek access to the fundamentals crucial for their functionality.

  Previously, in Universal Analytics, they could quickly and conveniently address their issues. Now, the situation has become, to put it mildly, more complex. We’ve identified 8 such questions for which the current version of GA4 either fails to provide answers or implies that answers would require significant enhancements. So, let’s dive into them one by one.

  Question 1 : What are the most popular traffic sources on my website ?

  Seemingly a straightforward question. What does GA4 tell us ? It responds with a question : “Which traffic source parameter are you interested in ?”

  

  Wait, what ?

  People just want to know which resources bring them the most traffic. Is that really an issue ?

  Unfortunately, yes. In GA4, there are not one, not two, but three traffic source parameters :

  1. Session source.
  2. First User Source – the source of the first session for each user.
  3. Just the source – determined at the event or conversion level.

  If you wanted to open a report and draw conclusions quickly, we have bad news for you. Before you start ranking your traffic sources by popularity, you need to do some mental work on which parameter and in what context you will look. And even when you decide, you’ll need to make a choice in the selection of standard reports : work with the User Acquisition Report or Traffic Acquisition.

  Yes, there is a difference between them : the first uses the First User Source parameter, and the second uses the session source. And you need to figure that out too.

  Question 2 : What is my conversion rate ?

  This question concerns everyone, and it should be simple, implying a straightforward answer. But no.

  

  In GA4, there are three conversion metrics (yes, three) :

  1. Session conversion – the percentage of sessions with a conversion.
  2. User conversion – the percentage of users who completed a conversion.
  3. First-time Purchaser Conversion – the share of active users who made their first purchase.

  If the last metric doesn’t interest us much, GA4 users can still choose something from the remaining two. But what’s next ? Which parameters to use for comparison ? Session source or user source ? What if you want to see the conversion rate for a specific event ? And how do you do this in analyses rather than in standard reports ?

  In the end, instead of an answer to a simple question, marketers get a bunch of new questions.

  Question 3. Can I trust user and session metrics ?

  Unfortunately, no. This may boggle the mind of those not well-versed in the mechanics of calculating user and session metrics, but it’s the plain truth : the numbers in GA4 and those in reality may and will differ.

  

  The reason is that GA4 uses the HyperLogLog++ statistical algorithm to count unique values. Without delving into details, it’s a mechanism for approximate estimation of a metric with a certain level of error.

  This error level is quite well-documented. For instance, for the Total Users metric, the error level is 1.63% (for a 95% confidence interval). In simple terms, this means that 100,000 users in the GA4 interface equate to 100,000 1.63% in reality.

  Furthermore – but this is no surprise to anyone – GA4 samples data. This means that with too large a sample size or when using a large number of parameters, the application will assess your metrics based on a partial sample – let’s say 5, 10, or 30% of the entire population.

  It’s a reasonable assumption, but it can (and probably will) surprise marketers – the metrics will deviate from reality. All end-users can do (excluding delving into raw data methodologies) is to take this error level into account in their conclusions.

  Question 4. How do I calculate First Click attribution ?

  You can’t. Unfortunately, as of late, GA4 offers only three attribution models available in the Attribution tab : Last Click, Last Click For Google Ads, and Data Driven. First Click attribution is essential for understanding where and when demand is generated. In the previous version of Google Analytics (and until recently, in the current one), users could quickly apply First Click and other attribution models, compare them, and gain insights. Now, this capability is gone.

  

  Certainly, you can look at the conversion distribution considering the First User Source parameter – this will be some proxy for First Click attribution. However, comparing it with others in the Model Comparison tab won’t be possible. In the context of the GA4 interface, it makes sense to forget about non-standard attribution models.

  Question 5. How do I account for intra-session traffic ?

  Intra-session traffic essentially refers to a change in traffic sources within a session. Imagine a scenario where a user comes to your site organically from Google and, within a minute, comes from an email campaign. In the previous version of Google Analytics, a new session with the traffic source “e-mail” would be created in such a case. But now, the situation has changed.

  A session now only ends in the case of a timeout – say, 30 minutes without interaction. This means a session will always have a source from which it started. If a user changes the source within a session (clicks on an ad, from email campaigns, and so on), you won’t know anything about it until they convert. This is a significant blow to intra-session traffic since their contribution to traffic remains virtually unnoticed. 

  Question 6. How can I account for users who have not consented to the use of third-party cookies ?
  

  You can’t. Google Consent Mode settings imply several options when a user rejects the use of 3rd party cookies. In GA4 and BigQuery, depersonalized cookieless pings will be sent. These pings do not contain specific client_id, session_id, or other custom dimensions. As a result, you won’t be able to consider them as users or link the actions of such users together.

  Question 7. How can I compare data in explorations with the previous year ?

  The maximum data retention period for a free GA4 account is 14 months. This means that if the date range is wider, you can only use standard reports. You won’t be able to compare or view cohorts or funnels for periods more than 14 months ago. This makes the product functionality less rich because various report formats in explorations are very convenient for comparing specific metrics in easily digestible reports.

  

  Of course, you always have the option to connect BigQuery and store raw data without limitations, but this process usually requires the involvement of an advanced analyst. And precisely this option is unavailable to most marketers in small teams.

  Question 8. Is the data for yesterday accurate ?

  Unknown. Google declares that data processing in GA4 takes up to 48 hours. And although this process is faster, most users still have room for frustration. And they can be understood.

  

  What does “data processing takes 24-48 hours” mean ? When will the data in reports be complete ? For yesterday ? Or the day before yesterday ? Or for all days that were more than two days ago ? Unclear. What should marketers tell their managers when they were asked if all the data is in this report ? Well, probably all of it… or maybe not… Let’s wait for 48 hours…

  Undoubtedly, computational resources and time are needed for data preprocessing and aggregation. It’s okay that data for today will not be up-to-date. And probably not for yesterday either. But people just want to know when they can trust their data. Are they asking for too much : just a note that this report contains all the data sent and processed by Google Analytics ?

  What should you do ?

  Credit should be given to the Google team – they have done a lot to enable users to answer these questions in one form or another. For example, you can use data streaming in BigQuery and work with raw data. The entry threshold for this functionality has been significantly lowered. In fact, if you are dissatisfied with the GA4 interface, you can organize your export to BigQuery and create your own reports without (almost) any restrictions.

  Another strong option is the widespread launch of GTM Server Side. This allows you to quite freely modify the event model and essentially enrich each hit with various parameters, doing this in a first-party context. This, of course, reduces the harmful impact of most of the limitations described in this text.

  But this is not a solution.

  The users in question – marketers, managers, developers – they do not want or do not have the time for a deep dive into the issue. And they want simple answers to simple (it seemed) questions. And for now, unfortunately, GA4 is more of a professional tool for analysts than a convenient instrument for generating insights for not very advanced users.

  Why is this such a serious issue ?

  The thing is – and this is crucial – over the past 10 years, Google has managed to create a sort of GA-bubble for marketers. Many of them have become so accustomed to Google Analytics that when faced with another issue, they don’t venture to explore alternative solutions but attempt to solve it on their own. And almost always, this turns out to be expensive and inconvenient.

  However, with the latest updates to GA4, it is becoming increasingly evident that this application is struggling to address even the most basic questions from users. And these questions are not fantastically complex. Much of what was described in this article is not an unsolvable mystery and is successfully addressed by other analytics services.

  Let’s try to answer some of the questions described from the perspective of Matomo.

  Question 1 : What are the most popular traffic sources ? [Solved]

  In the Acquisition panel, you will find at least three easily identifiable reports – for traffic channels (All Channels), sources (Websites), and campaigns (Campaigns). 

  

  With these, you can quickly and easily answer the question about the most popular traffic sources, and if needed, delve into more detailed information, such as landing pages.

  Question 2 : What is my conversion rate ? [Solved]

  Under Goals in Matomo, you’ll easily find the overall conversion rate for your site. Below that you’ll have access to the conversion rate of each goal you’ve set in your Matomo instance.

  

  Question 3 : Can I trust user and session metrics ? [Solved]

  Yes. With Matomo, you’re guaranteed 100% accurate data. Matomo does not apply sampling, does not employ specific statistical algorithms, or any analogs of threshold values. Yes, it is possible, and it’s perfectly normal. If you see a metric in the visits or users field, it accurately represents reality by 100%.

  Try Matomo for Free

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  Question 4 : How do I calculate First Click attribution ? [Solved]
  
  You can do this in the same section where the other 5 attribution models, available in Matomo, are calculated – in the Multi Attribution section.

  

  You can choose a specific conversion and, in a few clicks, calculate and compare up to 3 marketing attribution models. This means you don’t have to spend several days digging through documentation trying to understand how a particular model is calculated. Have a question – get an answer.

  Question 5 : How do I account for intra-session traffic ? [Solved]

  Matomo creates a new visit when a user changes a campaign. This means that you will accurately capture all relevant traffic if it is adequately tagged. No campaigns will be lost within a visit, as they will have a new utm_campaign parameter.

  This is a crucial point because when the Referrer changes, a new visit is not created, but the key lies in something else – accounting for all available traffic becomes your responsibility and depends on how you tag it.

  Try Matomo for Free

  Get the web insights you need, without compromising data accuracy.

  Start for free

  No credit card required

  Question 6 : How can I account for users who have not consented to the use of third-party cookies ? [Solved]

  Google Analytics requires users to accept a cookie consent banner with “analytics_storage=granted” to track them. If users reject cookie consent banners, however, then Google Analytics can’t track these visitors at all. They simply won’t show up in your traffic reports. 

  Matomo doesn’t require cookie consent banners (apart from in the United Kingdom and Germany) and can therefore continue to track visitors even after they have rejected a cookie consent screen. This is achieved through a config_id variable (the user identifier equivalent which is updating once a day). 

  

  This means that virtually all of your website traffic will be tracked regardless of whether users accept a cookie consent banner or not.

  Question 7 : How can I compare data in explorations with the previous year ? [Solved]
  

  There is no limitation on data retention for your aggregated reports in Matomo. The essence of Matomo experience lies in the reporting data, and consequently, retaining reports indefinitely is a viable option. So you can compare data for any timeframe. 7

  

• Your Essential SOC 2 Compliance Checklist

  11 mars, par Daniel Crough — Privacy, Security

  With cloud-hosted applications becoming the norm, organisations face increasing data security and compliance challenges. SOC 2 (System and Organisation Controls 2) provides a structured framework for addressing these challenges. Established by the American Institute of Certified Public Accountants (AICPA), SOC 2 has become a critical standard for demonstrating trustworthiness to clients and partners.

  A well-structured SOC 2 compliance checklist serves as your roadmap to successful audits and effective security practices. In this post, we’ll walk through the essential steps to achieve SOC 2 compliance and explain how proper analytics practices play a crucial role in maintaining this important certification.

  Download SOC2 Checklist

  

  What is SOC 2 compliance ?

  SOC 2 compliance applies to service organisations that handle sensitive customer data. While not mandatory, this certification builds significant trust with customers and partners.

  According to the AICPA, “SOC 2 reports are intended to meet the needs of a broad range of users that need detailed information and assurance about the controls at a service organisation relevant to security, availability, and processing integrity of the systems the service organisation uses to process users’ data and the confidentiality and privacy of the information processed by these systems.“

  At its core, SOC 2 helps organisations protect customer data through five fundamental principles : security, availability, processing integrity, confidentiality, and privacy.

  Think of it as a seal of approval that tells customers, “We take data protection seriously, and here’s the evidence.”

  Companies undergo SOC 2 audits to evaluate their compliance with these standards. During these audits, independent auditors assess internal controls over data security, availability, processing integrity, confidentiality, and privacy.

  What is a SOC 2 compliance checklist ?

  A SOC 2 compliance checklist is a comprehensive guide that outlines all the necessary steps and controls an organisation needs to implement to achieve SOC 2 certification. It covers essential areas including :

  • Security policies and procedures
  • Access control measures
  • Risk assessment protocols
  • Incident response plans
  • Disaster recovery procedures
  • Vendor management practices
  • Data encryption standards
  • Network security controls

  SOC 2 compliance checklist benefits

  A structured SOC 2 compliance checklist offers several significant advantages :

  Preparedness

  Preparing for a SOC 2 examination involves many complex elements. A checklist provides a clear, structured path, breaking the process into manageable tasks that ensure nothing is overlooked.

  Resource optimisation

  A comprehensive checklist reduces time spent identifying requirements, minimises costly mistakes and oversights, and enables more precise budget planning for the compliance process.

  Better team alignment

  A SOC 2 checklist establishes clear responsibilities for team members and maintains consistent understanding across all departments, helping align internal processes with industry standards.

  Risk reduction

  Following a SOC 2 compliance checklist significantly reduces the risk of compliance violations. Systematically reviewing internal controls provides opportunities to catch security gaps early, mitigating the risk of data breaches and unauthorised access.

  Audit readiness

  A well-maintained checklist simplifies audit preparation, reduces stress during the audit process, and accelerates the certification timeline.

  Business growth

  A successful SOC 2 audit demonstrates your organisation’s commitment to data security, which can be decisive in winning new business, especially with enterprise clients who require this certification from their vendors.

  Challenges in implementing SOC 2

  Implementing SOC 2 presents several significant challenges :

  Time-intensive documentation

  Maintaining accurate records throughout the SOC 2 compliance process requires diligence and attention to detail. Many organisations struggle to compile comprehensive documentation of all controls, policies and procedures, leading to delays and increased costs.

  Incorrect scoping of the audit

  Misjudging the scope can result in unnecessary expenses and extended timelines. Including too many systems complicates the process and diverts resources from critical areas.

  Maintaining ongoing compliance

  After achieving initial compliance, continuous monitoring becomes essential but is often neglected. Regular internal control audits can be overwhelming, especially for smaller organisations without dedicated compliance teams.

  Resource constraints

  Many organisations lack sufficient resources to dedicate to compliance efforts. This limitation can lead to staff burnout or reliance on expensive external consultants.

  Employee resistance

  Staff members may view new security protocols as unnecessary hurdles. Employees who aren’t adequately trained on SOC 2 requirements might inadvertently compromise compliance efforts through improper data handling.

  Analytics and SOC 2 compliance : A critical relationship

  One often overlooked aspect of SOC 2 compliance is the handling of analytics data. User behaviour data collection directly impacts multiple Trust Service Criteria, particularly privacy and confidentiality.

  Why analytics matters for SOC 2

  Standard analytics platforms often collect significant amounts of personal data, creating potential compliance risks :

  1. Privacy concerns : Many analytics tools collect personal information without proper consent mechanisms
  2. Data ownership issues : When analytics data is processed on third-party servers, maintaining control becomes challenging
  3. Confidentiality risks : Analytics data might be shared with advertising networks or other third parties
  4. Processing integrity questions : When data is transformed or aggregated by third parties, verification becomes difficult

  How Matomo supports SOC 2 compliance

  

  Matomo’s privacy-first analytics approach directly addresses these concerns :

  1. Complete data ownership : With Matomo, all analytics data remains under your control, either on your own servers or in a dedicated cloud instance
  2. Consent management : Built-in tools for managing user consent align with privacy requirements
  3. Data minimisation : Configurable anonymisation features help reduce collection of sensitive personal data
  4. Transparency : Clear documentation of data flows supports audit requirements
  5. Configurable data retention : Set automated data deletion schedules to comply with your policies

  By implementing Matomo as part of your SOC 2 compliance strategy, you address key requirements while maintaining the valuable insights your organisation needs for growth.

  Conclusion

  A SOC 2 compliance checklist helps organisations meet critical security and privacy standards. By taking a methodical approach to compliance and implementing privacy-respecting analytics, you can build trust with customers while protecting sensitive data.

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• Open Banking Security 101 : Is open banking safe ?

  3 décembre 2024, par Daniel Crough — Banking and Financial Services

  Open banking is changing the financial industry. Statista reports that open banking transactions hit $57 billion worldwide in 2023 and will likely reach $330 billion by 2027. According to ACI, global real-time payment (RTP) transactions are expected to exceed $575 billion by 2028.

  Open banking is changing how banking works, but is it safe ? And what are the data privacy and security implications for global financial service providers ?

  This post explains the essentials of open banking security and addresses critical data protection and compliance questions. We’ll explore how a privacy-first approach to data analytics can help you meet regulatory requirements, build customer trust and ultimately thrive in the open banking market while offering innovative financial products.

   

  

  

  EU Financial Services Analytics Maturity Report

  Discover trends, strategies, and opportunities to balance compliance and competitiveness.

  Download the report now

  What is open banking ?

  Open banking is a system that connects banks, authorised third-party providers and technology, empowering customers to securely share their financial data with other companies. At the same time, it unlocks access to more innovative and personalised financial products and services like spend management solutions, tailored budgeting apps and more convenient payment gateways. 

  With open banking, consumers have greater choice and control over their financial data, ultimately fostering a more competitive financial industry, supporting technological innovation and paving the way for a more customer-centric financial future.

  Imagine offering your clients a service that analyses spending habits across all accounts — no matter the institution — and automatically finds ways to save them money. Envision providing personalised financial advice tailored to individual needs or enabling customers to apply for a mortgage with just a few taps on their phone. That’s the power of open banking.

  Embracing this technology is an opportunity for banks and fintech companies to build new solutions for customers who are eager for a more transparent and personalised digital experience.

  How is open banking different from traditional banking ?

  In traditional banking, consumers’ financial data is locked away and siloed within each bank’s systems, accessible only to the bank and the account holder. While account holders could manually aggregate and share this data, the process is cumbersome and prone to errors.

  With open banking, users can choose what data to share and with whom, allowing trusted third-party providers to access their financial information directly from the source. 

  

  How does open banking work ?

  The technology that makes open banking possible is the application programming interface (API). Think of banking APIs as digital translators for different software systems ; instead of translating languages, they translate data and code.

  The bank creates and publishes APIs that provide secure access to specific types of customer data, like credit card transaction history and account balances. The open banking API acts like a friendly librarian, ready to assist apps in accessing the information they need in a secure and organised way.

  Third-party providers, like fintech companies, use these APIs to build their applications and services. Some tech companies also act as intermediaries between fintechs and banks to simplify connections to multiple APIs simultaneously.

  For example, banks like BBVA (Spain) and Capital One (USA) offer secure API platforms. Fintechs like Plaid and TrueLayer use those banking APIs as a bridge to users’ financial data. This bridge gives other service providers like Venmo, Robinhood and Coinbase access to customer data, allowing them to offer new payment gateways and investment tools that traditional banks don’t provide.

  Is open banking safe for global financial services ?

  Yes, open banking is designed from the ground up to be safe for global financial services.

  Open banking doesn’t make customer financial data publicly available. Instead, it uses a secure, regulated framework for sharing information. This framework relies on strong security measures and regulatory oversight to protect user data and ensure responsible access by authorised third-party providers.

  In the following sections, we’ll explore the key security features and banking regulations that make this technology safe and reliable.

  Regulatory compliance in open banking

  Regulatory oversight is a cornerstone of open banking security.

  In the UK and the EU, strict regulations govern how companies access and use customer data. The revised Payment Services Directive (PSD2) in Europe mandates strong customer authentication and secure communication, promoting a high level of security for open banking services.

  To offer open banking services, companies must register with their respective regulatory bodies and comply with all applicable data protection laws.

  For example, third-party service providers in the UK must be authorised by the Financial Conduct Authority (FCA) and listed on the Financial Services Register. Depending on the service they provide, they must get an Account Information Service Provider (AISP) or a Payment Initiation Service Provider (PISP) license.

  Similar regulations and registries exist across Europe, enforced by the European National Competent Authority, like BaFin in Germany and the ACPR in France.

  In the United States, open banking providers don’t require a special federal license. However, this will soon change, as the U.S. Consumer Financial Protection Bureau (CFPB) unveiled a series of rules on 22 October 2024 to establish a regulatory framework for open banking.

  These regulations ensure that only trusted providers can participate in the open banking ecosystem. Anyone can check if a company is a trusted provider on public databases like the Regulated Providers registry on openbanking.org.uk. While being registered doesn’t guarantee fair play, it adds a layer of safety for consumers and banks.

  Key open banking security features that make it safe for global financial services

  Open banking is built on a foundation of solid security measures. Let’s explore five key features that make it safe and reliable for financial institutions and their customers.

  

  Strong Customer Authentication (SCA)

  Strong Customer Authentication (SCA) is a security principle that protects against unauthorised access to user financial data. It’s a regulated and legally required form of multi-factor authentication (MFA) within the European Economic Area.

  SCA mandates that users verify their identity using at least two of the following three factors :

  • Something they know (a password, PIN, security question, etc.)
  • Something they have (a mobile phone, a hardware token or a bank card)
  • Something they are (a fingerprint, facial recognition or voice recognition)

  This type of authentication helps reduce the risk of fraud and unauthorised transactions.

  API security

  PSD2 regulations mandate that banks provide open APIs, giving consumers the right to use any third-party service provider for their online banking services. According to McKinsey research, this has led to a surge in API adoption within the banking sector, with the largest banks allocating 14% of their IT budget to APIs. 

  To ensure API security, banks and financial service providers implement several measures, including :

  • API gateways, which act as a central point of control for all API traffic, enforcing security policies and preventing unauthorised access
  • API keys and tokens to authenticate and authorise API requests (the equivalent of a library card for apps)
  • Rate limiting to prevent denial-of-service attacks by limiting the number of requests a third-party application can make within a specific timeframe
  • Regular security audits and penetration testing to identify and address potential vulnerabilities in the API infrastructure

  Data minimisation and purpose limitation

  Data minimisation and purpose limitation are fundamental principles of data protection that contribute significantly to open banking safety.

  Data minimisation means third parties will collect and process only the data necessary to provide their service. Purpose limitation requires them to use the collected data only for its original purpose.

  For example, a budgeting app that helps users track their spending only needs access to transaction history and account balances. It doesn’t need access to the user’s full transaction details, investment portfolio or loan applications.

  Limiting the data collected from individual banks significantly reduces the risk of potential misuse or exposure in a data breach.

  Encryption

  Encryption is a security method that protects data in transit and at rest. It scrambles data into an unreadable format, making it useless to anyone without the decryption key.

  In open banking, encryption protects users’ data as it travels between the bank and the third-party provider’s systems via the API. It also protects data stored on the bank’s and the provider’s servers. Encryption ensures that even if a breach occurs, user data remains confidential.

  Explicit consent

  In open banking, before a third-party provider can access user data, it must first inform the user what data it will pull and why. The customer must then give their explicit consent to the third party collecting and processing that data.

  This transparency and control are essential for building trust and ensuring customers feel safe using third-party services.

  But beyond that, from the bank’s perspective, explicit customer consent is also vital for compliance with GDPR and other data protection regulations. It can also help limit the bank’s liability in case of a data breach.

  Explicit consent goes beyond sharing financial data. It’s also part of new data privacy regulations around tracking user behaviour online. This is where an ethical web analytics solution like Matomo can be invaluable. Matomo fully complies with some of the world’s strictest privacy regulations, like GDPR, lGPD and HIPAA. With Matomo, you get peace of mind knowing you can continue gathering valuable insights to improve your services and user experience while respecting user privacy and adhering to regulations.

  Risks of open banking for global financial services

  While open banking offers significant benefits, it’s crucial to acknowledge the associated risks. Understanding these risks allows financial institutions to implement safeguards and protect themselves and their customers.

  

  Risk of data breaches

  By its nature, open banking is like adding more doors and windows to your house. It’s convenient but also gives burglars more ways to break in.

  Open banking increases what cybersecurity professionals call the “attack surface,” or the number of potential points of vulnerability for hackers to steal financial data.

  Data breaches are a serious threat to banks and financial institutions. According to IBM’s 2024 Cost of a Data Breach Report, each breach costs companies in the US an average of $4.88 million. Therefore, banks and fintechs must prioritise strong security measures and data protection protocols to mitigate these risks.

  Risk of third-party access

  By definition, open banking involves granting third-party providers access to customer financial information. This introduces a level of risk outside the bank’s direct control.

  Financial institutions must carefully vet third-party providers, ensuring they meet stringent security standards and comply with all relevant data protection regulations.

  Risk of user account takeover

  Open banking can increase the risk of user account takeover if adequate security measures are not in place. For example, if a malicious third-party provider gains unauthorised access to a user’s bank login details, they could take control of the user’s account and make fraudulent bank transactions.

  A proactive approach to security, continuous monitoring and a commitment to evolving best practices and security protocols are crucial for navigating the open banking landscape.

  Open banking and data analytics : A balancing act for financial institutions

  The additional data exchanged through open banking unveils deeper insights into customer behaviour and preferences. This data can fuel innovation, enabling the development of personalised products and services and improved risk management strategies.

  However, using this data responsibly requires a careful balancing act.

  Too much reliance on data without proper safeguards can erode trust and invite regulatory issues. The opposite can stifle innovation and limit the technology’s potential.

  Matomo Analytics derisks web and app environments by giving full control over what data is tracked and how it is stored. The platform prioritises user data privacy and security while providing valuable data and analytics that will be familiar to anyone who has used Google Analytics.

  Open banking, data privacy and AI

  The future of open banking is entangled with emerging technologies like artificial intelligence (AI) and machine learning. These technologies significantly enhance open banking analytics, personalise services, and automate financial tasks.

  Several banks, credit unions and financial service providers are already exploring AI’s potential in open banking. For example, HSBC developed the AI-enabled FX Prompt in 2023 to improve forex trading. The bank processed 823 million client API calls, many of which were open banking.

  However, using AI in open banking raises important data privacy considerations. As the American Bar Association highlights, balancing personalisation with responsible AI use is crucial for open banking’s future. Financial institutions must ensure that AI-driven solutions are developed and implemented ethically, respecting customer privacy and data protection.

  Conclusion

  Open banking presents a significant opportunity for innovation and growth in the financial services industry. While it’s important to acknowledge the associated risks, security measures like explicit customer consent, encryption and regulatory frameworks make open banking a safe and reliable system for banks and their clients.

  Financial service providers must adopt a multifaceted approach to data privacy, implementing privacy-centred solutions across all aspects of their business, from open banking to online services and web analytics.

  By prioritising data privacy and security, financial institutions can build customer trust, unlock the full potential of open banking and thrive in today’s changing financial environment.