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Security and data protection 'critical' in implementation of Open Banking

Tom Belger | 12:23 Thursday 7th June 2018

Banking software provider Temenos has revealed more about the expansion of its financial crime mitigation product which includes an AI-based suspicious activity prevention solution.

The solution – which was launched last month – aims to protect banks and their customers from fraud.

Adam Gable, product director at Temenos (pictured above), has spoken to Specialist Banking to explain more about the product and how it will support the banking industry.

What characteristics does the suspicious activity prevention module pick up on that would indicate suspicious transactions?

“It builds [a] profile for each entity being monitored (customer, account, peer-group, segment, third party etc) based on their activity and relationship history.

“Using these profiles, the module will detect deviations in value and velocity from usual or normal behaviour, such as new beneficiaries, abnormal frequency of transactions, unusual locations, amounts and currencies or not-seen-before business partners – just to name a few.

“The module will notify the investigating user of any out-of-character behaviour with an alert, as well as provide the normal context to aid the investigation, thus being of maximum benefit to the customer’s and institution’s security.”

The module is described as self-learning, does this mean it becomes more effective over time?


“On the one hand, it is self-learning for users to create profiles based on expert rules.

“On the other, the module learns from past behaviour – the bigger the amount of data collected for a given entity, the more meaningful the profile will be – based on the entity’s transaction history.”

Will the module interact with other financial crime mitigation (FCM) products?

“Yes, as part of a fully integrated, multi-stranded mitigation platform, it does.

“The module is able to take additional data points from other FCM products and systems to be processed in our own case management and investigation module.”

Which banking platforms is the product aimed at?

“The product is aimed at banks [in] any sector, any size, from the tier 1 banks – facilitating a million-plus transactions a day – down to the smaller tier 5 banks, such as the international branches or the smaller regional banks.

“Although pre-integrated to Temenos T24 core banking, Temenos’ financial crime mitigation suite can support any core banking platform.”

How important is security and data protection in the implementation of Open Banking partnerships and the use of APIs?

“We think it’s critical.

“With the rapidly increasing adoption of Open Banking, there will be more participants – and likely more transactions – in the value chain, both giving rise to more vulnerability.

“The EBA has already issued technical standards which outline how banks should implement transaction monitoring to protect themselves and customers.

“These would allow frictionless traffic where risk is low, but enforcing strong customer authentication where needed.

“In line with this, we consider security in the Open Banking world to be of paramount importance for protecting banks and their customers, and an integral part of the digital banking landscape.”

Are challenger banks and fintechs prepared enough to deal with security issues surrounding Open Banking?

“Challenger banks and fintechs tend, in fact, to use newer purpose-fit technology.

“As a core banking provider in the market – speaking to many customers and prospects – one of the main issues we’re actually seeing is that the spaghetti of legacy systems is a particular challenge when it comes to dealing with these issues.”

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