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• Fintech Content Marketing : 10 Best Practices & Growth Strategies

  24 juillet 2024, par Erin

  Content marketing is an effective strategy for growth and building trust. This is especially true in the fintech industry, where competition is intense and trust is crucial. Content marketing helps you strengthen customer relationships, engage your audience, and differentiate yourself from competitors.

  To get the most out of your fintech content marketing, you need to develop the right strategy.

  In this guide, we’ll cover everything you need to know about content marketing for fintech companies so you can expand your reach and grow your business.

  What is fintech content marketing ?

  Fintech content marketing is creating content around financial topics on the internet to attract, engage, and convert audiences.

  Fintech companies can use a content strategy to drive leads by creating educational content.

  

  While financial content is important, it’s easy for it to feel boring, unrelatable, or confusing. But, when done right, fintech companies can educate their audiences with great content marketing that helps their audience understand financial topics in-depth.

  Fintech companies can create written, audio, or video content to inform their audiences about financial topics they’re interested in.

  From there, each piece of content can then be distributed to different mediums :

  • Blogs
  • Website
  • Facebook
  • YouTube
  • Instagram
  • Other websites
  • Apps
  • And more

  Once content is distributed, fintech companies can then analyse how effective the content is by tracking web analytics data like search engine traffic, social media engagement, and new customers.

  7 reasons fintech companies need content marketing

  Before we dive into fintech content marketing best practices, let’s recap why fintech companies need to lean into content to grow their business.

  Here are seven reasons your financial company needs to deploy a robust content strategy :

  

  1. Reach new audiences

  If you want to grow your fintech company, you need to find new customers. Creating content is a proven path to marketing yourself online and attracting a larger audience.

  By using search engine optimisation (SEO), social media marketing, and YouTube, you can expand your audience and grow your customer base.

  With content marketing, you can find new audiences without needing a massive budget, making scaling easier.

  2. Engage current audience

  While content can be a powerful method to reach new customers, it isn’t the only thing it’s good for.

  If you want to grow your business, another way to leverage your content is to keep your current audience engaged.

  You can create financial content to educate, inform, and add value to your current audience who already knows you. Repurposing content between the different platforms your audience is on keeps them engaged with you and your brand.

  It’s a simple way to capture and keep the attention of your audience, build trust, and convert more prospects into customers.

  3. Build relationships with customers

  You should leverage content marketing in various spaces, such as social media, your website, a blog, or even YouTube. Creating content on different channels allows you to build relationships with your customers on autopilot.

  The general rule in marketing is that the more touch points you have with your customers, the more you’ll sell. Creating more content means you always have new opportunities to increase those touchpoints, build deeper relationships, and sell more.

  4. Grow authority in a space

  If you want people to trust you and your financial tech, you need to be seen as an authority. How can someone trust that your app or web platform will help them with their finances if they don’t trust you’re a financial expert ?

  You should use informative content to become a thought leader in your space. You can post content on social media or your own platforms.

  You can also spread your authority by leveraging other brands’ or influencers’ audiences through guest blog posting and guest podcasting.

  5. Drive new leads

  Content marketing isn’t just a fun hobby for businesses. It’s one of the smartest ways to drive new leads.

  You should be crafting content for your top-of-funnel marketing strategy to attract potential customers.

  Creating content consistently is a great way to bring in new audience members into your funnel.

  Once you grow your top-of-funnel audience, you can convert them into leads by getting them to join your email list or trial your financial software.

  One tip to get more out of your content strategy is creating evergreen content to continually drive leads. For example, create “set-it-and-forget it” blog posts or YouTube videos that will continue working for you daily to attract new audience members searching for helpful financial information. Then, provide a call to action on that content to join your email list (by leveraging a lead magnet).

  6. Convert prospects to customers

  When you have a continual flow of new top-of-funnel prospects, you always have a fresh cycle of prospects you can convert into customers.

  Content is primarily used to attract new audience members and engage your current audience at the top of your funnel. But it can also be used to convert your audience into customers.

  Try mixing up your content types to drive conversions :

  • Educational
  • Entertaining
  • Promotional

  Don’t just show off educational content.

  You should also mix in “authority” content by displaying case studies of user success stories and calling to action to sign up for a free trial or request a demo.

  7. Lower Customer Acquisition Cost (CAC)

  On the business side, if you want a marketing strategy that will keep expenses low long term, you’ll want to invest more in content.

  Content marketing has a great return on investment (ROI) for your time and effort.

  Why ?

  Because the customer acquisition costs (CAC) are so low.

  You can create content that can bring in leads for months if not years.

  If you only use Google or Facebook ads to drive new leads, you always have to “pay-to-play.” When you turn the advertising tap off, your leads dry up.

  But, with blogs and videos, you can create content that can bring in organic customers on repeat. It’s like a snowball effect that keeps going long after you’ve completed the initial work.

  10 fintech content marketing best practices

  Here are ten best practices to establish a strong content marketing strategy as a fintech company :

  

  1. Set SMART goals

  A good content strategy starts with goal-setting. You’ll never get there if you don’t know where you’re going.

  To make sure your fintech content marketing strategy is a success, you need to set SMART goals :

  • Specific
  • Measurable
  • Achievable
  • Relevant
  • Time-bound

  For example, you might set a goal to reach 20,000 blog visits in one year and convert blog visits at a rate of 3%.

  Setting clear content goals will streamline operations, so you stay consistent and get the most out of your efforts.

  3. Be transparent

  Transparency is crucial for fintech companies, as they handle sensitive financial data and, in many cases, monetary transactions.

  It’s essential for you to be open and clear about your products, services, and data practices. By being honest about privacy and security measures, fintechs can build and maintain trust with their customers.

  This transparency not only helps in establishing credibility but also ensures customers feel confident about how their financial information is managed and protected.

  

  4. Take an education-first approach

  Content isn’t just about “hooking” or entertaining your audience. That’s just one aspect of a content strategy.

  The best approach to building authority and converting leads from your content is to take an education-first approach.

  Remember above, when we touched on understanding your ICP ? You need to know your ICP’s interests and pain points inside and out and then map your product’s strengths to those that are relevant.

  Always start with your ICP, then build the content strategy around them based on your product.

  Find connections and identify how your product can address the ICP’s interests and pain points.

  For example, let’s say your ICPs are Gen Z consumers. They’re interested in independence and saving for future goals. Their pain points might include lack of investment knowledge and managing student debts and other loans.

  Let’s say your product is a personal finance app. Some of your benefits might be budget tracking and beginner-friendly investment options. You could create a content strategy around budgeting in your 20s and investing for beginners.

  Content strategies will vary widely based on your ICP. For instance, content for a fintech company targeting those approaching retirement will need a different focus compared to that aimed at younger consumers.

  Remember : practical, step-by-step, value-driven content performs best regarding conversions.

  5. Leverage the right tools

  If you’re going to succeed with content, you need to lean on the right tools.

  Here are a few types of tools you should consider (and recommendations) :

  • Project management (i.e., Asana)
  • Content management system (i.e., WordPress)
  • Content scheduling (i.e., Hootsuite)
  • Design (i.e., Canva)
  • SEO (i.e., Ahrefs)
  • Web analytics (i.e., Matomo)

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  6. Promote your content on different platforms

  You’ll want to promote your fintech content marketing strategy on different channels and platforms to get the most out of your fintech content marketing strategy.

  Start with one core platform before you pick a few platforms to promote your content. You should leverage at least one social media platform.

  Then, create a blog and an email newsletter to ensure you create multiple touchpoints.

  Here are some tips on how to pick the right platform :

  • Consider age range (i.e. TikTok for a younger audience, Facebook for an older audience)
  • Consider your preferred content type (YouTube for long-form video, X for short-form written content
  • Consider your competition (i.e. go where competitive fintech companies already are)

  7. Track results 

  How do you know if you’re on pace to reach the SMART goals you set earlier ?

  By tracking your results. 

  You should dive into your data regularly to ensure your content is working. Make sure to track social media, email marketing, and web results.

  Keep a close eye on your website KPIs and track your conversions to ensure a return on investment (ROI). For more detailed guidance on monitoring your website’s performance, check out our blog on how to check website traffic as accurately as possible.

  Remember, a data-driven approach is the best way to stay on track with your content goals.

  8. Establish a content leader

  Your content marketing needs a leader. You should establish someone on your marketing team to oversee your content plan. 

  They should ensure they collaborate well with different teams, understand social media and SEO, and know how to manage projects.

  Most of all, don’t forget that they’re in charge of tracking your data and reporting to higher-ups, so they should be comfortable with web analytics and know how to track performance well.

  9. Optimise for SEO

  It’s not enough to create a weekly blog post. You could craft the most valuable content on your website, but nobody will find it online if it isn’t optimised for SEO.

  Your content leader should analyse SEO data using a tool like Ahrefs or SEMrush to analyse different keywords to target in your content. 

  A web analytics tool like Matomo can then be used to track results. Matomo offers traditional web analytics, including pageviews, bounce rate, and sources of traffic, alongside features like heatmaps, session recordings, and A/B testing.

  These advanced features provide deeper insights into how users interact with your site and content, helping you pinpoint areas for improvement. Improving the user experience based on these insights can then positively impact your Google rankings.

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  10. Stay compliant

  Fintech is a highly regulated industry. Keeping this in mind, you need to ensure you take the necessary steps to ensure you remain compliant with all applicable laws and regulations.

  Non-compliance can result in severe penalties.

  Given these high standards, it’s crucial to ensure that user data remains private and secure. Matomo helps with this by providing a compliant web analytics solution that respects user privacy. With Matomo, you can confidently manage compliance and build trust with your customers while also reliably tracking the performance of your content marketing.

  

  Drive your content marketing strategy with Matomo

  Leaning into content marketing can be one of the best ways your fintech company can attract, engage, convert, and retain your audience.

  By creating high-quality content for your audience on social media, YouTube, and your website, you can establish your brand as an authority to grow your business for years to come.

  But remember, you need to make sure you’re only using privacy-friendly, compliant tools to protect your audience’s data.

  Thankfully, Matomo has you covered.

  As a privacy-friendly web analytics tool, Matomo ensures that your website data is tracked and stored in compliance with privacy laws.

  Trusted by over 1 million websites, it offers reliable data without sampling, guaranteeing accuracy. Matomo is designed to be fully compliant with privacy regulations such as GDPR and CCPA, while also providing advanced features like heatmaps, session recordings, and A/B testing to help you track and enhance your website’s performance.

  Request a demo to see how Matomo can benefit your fintech business now.

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  21 day free trial. No credit card required.

  
  

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• Clickstream Data : Definition, Use Cases, and More

  15 avril 2024, par Erin

  Gaining a deeper understanding of user behaviour — customers’ different paths, digital footprints, and engagement patterns — is crucial for providing a personalised experience and making informed marketing decisions. 

  In that sense, clickstream data, or a comprehensive record of a user’s online activities, is one of the most valuable sources of actionable insights into users’ behavioural patterns. 

  This article will cover everything marketing teams need to know about clickstream data, from the basic definition and examples to benefits, use cases, and best practices. 

  What is clickstream data ? 

  As a form of web analytics, clickstream data focuses on tracking and analysing a user’s online activity. These digital breadcrumbs offer insights into the websites the user has visited, the pages they viewed, how much time they spent on a page, and where they went next.

  

  Your clickstream pipeline can be viewed as a “roadmap” that can help you recognise consistent patterns in how users navigate your website. 

  With that said, you won’t be able to learn much by analysing clickstream data collected from one user’s session. However, a proper analysis of large clickstream datasets can provide a wealth of information about consumers’ online behaviours and trends — which marketing teams can use to make informed decisions and optimise their digital marketing strategy. 

  Clickstream data collection can serve numerous purposes, but the main goal remains the same — gaining valuable insights into visitors’ behaviours and online activities to deliver a better user experience and improve conversion likelihood. 

  Depending on the specific events you’re tracking, clickstream data can reveal the following : 

  • How visitors reach your website 
  • The terms they type into the search engine
  • The first page they land on
  • The most popular pages and sections of your website
  • The amount of time they spend on a page 
  • Which elements of the page they interact with, and in what sequence
  • The click path they take 
  • When they convert, cancel, or abandon their cart
  • Where the user goes once they leave your website

  As you can tell, once you start collecting this type of data, you’ll learn quite a bit about the user’s online journey and the different ways they engage with your website — all without including any personal details about your visitors.

  Types of clickstream data 

  While all clickstream data keeps a record of the interactions that occur while the user is navigating a website or a mobile application — or any other digital platform — it can be divided into two types : 

  • Aggregated (web traffic) data provides comprehensive insights into the total number of visits and user interactions on a digital platform — such as your website — within a given timeframe 
  • Unaggregated data is broken up into smaller segments, focusing on an individual user’s online behaviour and website interactions 

  One thing to remember is that to gain valuable insights into user behaviour and uncover sequential patterns, you need a powerful tool and access to full clickstream datasets. Matomo’s Event Tracking can provide a comprehensive view of user interactions on your website or mobile app — everything from clicking a button and completing a form to adding (or removing) products from their cart. 

  On that note, based on the specific events you’re tracking when a user visits your website, clickstream data can include : 

  • Web navigation data : referring URL, visited pages, click path, and exit page
  • User interaction data : mouse movements, click rate, scroll depth, and button clicks
  • Conversion data : form submissions, sign-ups, and transactions 
  • Temporal data : page load time, timestamps, and the date and time of day of the user’s last login 
  • Session data : duration, start, and end times and number of pages viewed per session
  • Error data : 404 errors and network or server response issues 

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  Clickstream data benefits and use cases 

  Given the actionable insights that clickstream data collection provides, it can serve a wide range of use cases — from identifying behavioural patterns and trends and examining competitors’ performance to helping marketing teams map out customer journeys and improve ROI.

  

  According to the global Clickstream Analytics Market Report 2024, some key applications of clickstream analytics include click-path optimisation, website and app optimisation, customer analysis, basket analysis, personalisation, and traffic analysis. 

  

  The behavioural patterns and user preferences revealed by clickstream analytics data can have many applications — we’ve outlined the prominent use cases below. 

  Customer journey mapping 

  Clickstream data allows you to analyse the e-commerce customer’s online journey and provides insights into how they navigate your website. With such a comprehensive view of their click path, it becomes easier to understand user behaviour at each stage — from initial awareness to conversion — identify the most effective touchpoints and fine-tune that journey to improve their conversion likelihood. 

  Identifying customer trends 

  Clickstream data analytics can also help you identify trends and behavioural patterns — the most common sequences and similarities in how users reached your website and interacted with it — especially when you can access data from many website visitors. 

  Think about it — there are many ways in which you can use these insights into the sequence of clicks and interactions and recurring patterns to your team’s advantage. 

  Here’s an example : 

  It can reveal that some pieces of content and CTAs are performing well in encouraging visitors to take action — which shows how you should optimise other pages and what you should strive to create in the future, too. 

  Preventing site abandonment 

  Cart abandonment remains a serious issue for online retailers : 

  According to a recent report, the global cart abandonment rate in the fourth quarter of 2023 was at 83%. 

  That means that roughly eight out of ten e-commerce customers will abandon their shopping carts — most commonly due to additional costs, slow website loading times and the requirement to create an account before purchasing. 

  In addition to cart abandonment predictions, clickstream data analytics can reveal the pages where most visitors tend to leave your website. These drop-off points are clear indicators that something’s not working as it should — and once you can pinpoint them, you’ll be able to address the issue and increase conversion likelihood.

  Improving marketing campaign ROI 

  As previously mentioned, clickstream data analysis provides insights into the customer journey. Still, you may not realise that you can also use this data to keep track of your marketing effectiveness. 

  Global digital ad spending continues to grow — and is expected to reach $836 billion by 2026. It’s easy to see why relying on accurate data is crucial when deciding which marketing channels to invest in. 

  You want to ensure you’re allocating your digital marketing and advertising budget to the channels — be it SEO, pay-per-click (PPC) ads, or social media campaigns — that impact driving conversions. 

  When you combine clickstream e-commerce data with conversion rates, you’ll find the latter in Matomo’s goal reports and have a solid, data-driven foundation for making better marketing decisions.

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  Delivering a better user experience (UX) 

  Clickstream data analysis allows you to identify specific “pain points” — areas of the website that are difficult to use and may cause customer frustration. 

  It’s clear how this would be beneficial to your business : 

  Once you’ve identified these pain points, you can make the necessary changes to your website’s layout and address any technical issues that users might face, improving usability and delivering a smoother experience to potential customers. 

  Collecting clickstream data : Tools and legal implications 

  Your team will need a powerful tool capable of handling clickstream analytics to reap the benefits we’ve discussed previously. But at the same time, you need to respect users’ online privacy throughout clickstream data collection.

  

  Generally speaking, there are two ways to collect data about users’ online activity — web analytics tools and server log files.

  Web analytics tools are the more commonly used solution. Specifically designed to collect and analyse website data, these tools rely on JavaScript tags that run in the browser, providing actionable insights about user behaviour. Server log files can be a gold mine of data, too — but that data is raw and unfiltered, making it much more challenging to interpret and analyse. 

  That brings us to one of the major clickstream challenges to keep in mind as you move forward — compliance.

  While Google remains a dominant player in the web analytics market, there’s one area where Matomo has a significant advantage — user privacy. 

  Matomo operates according to privacy laws — including the General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA), making it an ethical alternative to Google Analytics. 

  It should go without saying, but compliance with data privacy laws — the most talked-about one being the GDPR framework introduced by the EU — isn’t something you can afford to overlook. 

  The GDPR was first implemented in the EU in 2018. Since then, several fines have been issued for non-compliance — including the record fine of €1.2 billion that Meta Platforms, Inc. received in 2023 for transferring personal data of EU-based users to the US.

  Clickstream analytics data best practices 

  

  As valuable as it might be, processing large amounts of clickstream analytics data can be a complex — and, at times, overwhelming — process. 

  Here are some best practices to keep in mind when it comes to clickstream analysis : 

  Define your goals 

  It’s essential to take the time to define your goals and objectives. 

  Once you have a clear idea of what you want to learn from a given clickstream dataset and the outcomes you hope to see, it’ll be easier to narrow down your scope — rather than trying to tackle everything at once — before moving further down the clickstream pipeline. 

  Here are a few examples of goals and objectives you can set for clickstream analysis : 

  • Understanding and predicting users’ behavioural patterns 
  • Optimising marketing campaigns and ROI 
  • Attributing conversions to specific marketing touchpoints and channels

  Analyse your data 

  Collecting clickstream analytics data is only part of the equation ; what you do with raw data and how you analyse it matters. You can have the most comprehensive dataset at your disposal — but it’ll be practically worthless if you don’t have the skill set to analyse and interpret it. 

  In short, this is the stage of your clickstream pipeline where you uncover common sequences and consistent patterns in user behaviour. 

  Clickstream data analytics can extract actionable insights from large datasets using various approaches, models, and techniques. 

  Here are a few examples : 

  • If you’re working with clickstream e-commerce data, you should perform funnel or conversion analyses to track conversion rates as users move through your sales funnel. 
  • If you want to group and analyse users based on shared characteristics, you can use Matomo for cohort analysis. 
  • If your goal is to predict future trends and outcomes — conversion and cart abandonment prediction, for example — based on available data, prioritise predictive analytics.

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  Organise and visualise your data

  As you reach the end of your clickstream pipeline, you need to start thinking about how you will present and communicate your data. And what better way to do that than to transform that data into easy-to-understand visualisations ? 

  Here are a few examples of easily digestible formats that facilitate quick decision-making : 

  • User journey maps, which illustrate the exact sequence of interactions and user flow through your website 
  • Heatmaps, which serve as graphical — and typically colour-coded — representations of a website visitor’s activity 
  • Funnel analysis, which are broader at the top but get increasingly narrower towards the bottom as users flow through and drop off at different stages of the pipeline 

  Collect clickstream data with Matomo 

  Clickstream data is hard to beat when tracking the website visitor’s journey — from first to last interaction — and understanding user behaviour. By providing real-time insights, your clickstream pipeline can help you see the big picture, stay ahead of the curve and make informed decisions about your marketing efforts. 

  Matomo accurate data and compliance with GDPR and other data privacy regulations — it’s an all-in-one, ethical platform that can meet all your web analytics needs. That’s why over 1 million websites use Matomo for their web analytics.

  Try Matomo free for 21 days. No credit card required.

  Try Matomo for Free

  21 day free trial. No credit card required.

  
  

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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.