Technology and Data News and Events

The importance of data quality in open banking and API adoption

by Mike Jones in Cloud, Data Analytics 27/04/2022

Innovative technologies have made financial processes more efficient, reduced the number of errors and transformed how customers view and interact with their money. In terms of product development, measuring customer habits can generate better decisions, and businesses can create structured plans based on real-time API metrics and data to respond effectively to any changes in the market.
With the integration of additional SaaS-based applications and other services by more financial businesses, the opportunity for risk continues to increase too. The importance of data quality and security will only rise in a world where cyber-attacks become more prevalent, and a lack of compliance can be significantly detrimental to an organisation. API technology provides opportunities to innovate in the financial industry, enabling organisations a competitive advantage.

Businesses today are established on data, while finance-related organisations are established on customer trust. If the security of a customer’s money or information is compromised, the trust with the business is lost. An organisation must have 100% security of the data used in developing and implementing an API tool that needs that data to function.

Open banking services have given customers greater control over their finances. People can move and manage their money with greater security from stricter regulations. Open banking platforms are accessible from many devices, making them a simple and popular option for many individuals. The customer experience has improved significantly through open banking and provided several benefits, such as more affordable payment options and smart banking services.

Finance businesses can provide customised products and customer service based on intelligent algorithms that can predict the needs and behaviours of their customers. Consequently, any transactional data quality is dependent on how this data is initially structured. With such a variety of data collected, this can become challenging for data cleansing. Data teams will spend more time applying potentially ‘faulty’ data for analysis. It’s likely that valuable information could be lost or not considered, resulting in the need for more efficient data preparation.

Utilising Real-Time Decision-Making

The instant message-based transaction generated from APIs benefits users at all levels. These systems generate quick, standardised information based on preselected details encoded into the API. This standard structure results in less uncertainty for individuals and a more efficient test design that enables professionals to explore data quality issues.

How Open Banking APIs influence data quality

Protecting outbound data

Poor data within the API will result in operational and transactional problems by impacting reporting quality, searches and analytics. Financial professionals or anyone in a customer-focused position may have to search for specific customer accounts and, in the process, find duplicated data for the same individual. Duplicated records in online financial systems can cause discrepancies and take up unnecessary space, resulting in time and costly implications for a business. In some cases, internal reports could be on incorrect data and potentially be damaging when making strategic decisions on products or other services based on inaccurate data.

API Security Considerations

Systems may be at higher risk of malfunctioning when poor data passes through an API. Quality checks must test against data structures and avoid any potential security breaches. While many cases of API security problems are unintentional, there are intentional cyber-attacks which can leave business systems inactive for long periods.

When APIs are exposed to external systems, it’s critical that security and data measures are in place and data professionals can manage all data types. Centralised services in the finance industry committed to data quality management must collaborate with the relevant regulatory and legislative groups to understand and manage these processes.

While defining the problem of data quality in open banking is relatively simple, the solution can be challenging and ignoring the issue can result in considerable problems for a business. The rapid development of technology has made it challenging for organisations to handle customer data. Technology is one of the least regulated markets, while finance and banking are the most heavily regulated industries, and data quality is critical to security.

Any customer data shared with third-party groups via an API will always pose a possible risk. If any of this information is inaccurate, the risk of exposure will rise further. Managing this risk involves having data quality solutions that ensure the customer data collected from open banking APIs are complete and correct.

Data quality assurance within finance must incorporate data governance measures and include a centre of data quality excellence. Establishing these frameworks and plans for data quality standards in open banking data ensures these problems can be solved.