Open finance is no longer a fringe experiment – it’s a competitive necessity, as illustrated by American Banker: regional banks are already leaning in, with 68% calling open finance a high or critical priority. But behind the enthusiasm sits a risk landscape that’s widening faster than many institutions can adapt.

Here’s the reality: open finance isn’t just a technology shift. It’s a structural rewiring of risk, liability, and operational resilience. And the risks are not theoretical – bankers across every tier are naming them explicitly.

1. Security and data privacy: the risk that keeps everyone awake

Across the board – community banks, regionals, nationals, and credit unions – security and data‑privacy concerns are the number one risk.

The numbers speak for themselves:

• 56% of community bankers cite security and privacy as their top concern
• 40% of regional bankers say the same
• 42% of national bankers put it at the top of their list
• 59% of credit‑union leaders rank it as their biggest worry

Why? Because open finance expands the attack surface dramatically

Banks are grappling with:

• Exposure of sensitive customer data as it moves between institutions
• A surge in API endpoints and third‑party integrations
• AI‑driven cyber threats that are harder to detect and defend against
• The reputational fallout of a breach in an ecosystem where data flows freely

Open finance promises interoperability – but it also creates interdependence. One weak link becomes everyone’s problem.

2. Data liability: the grey zone no one wants to own

As data moves, so does responsibility – but not everyone agrees on where it lands.

Regional and national banks are especially concerned about:

• Who is accountable when shared data is compromised
• How liability is split across banks, aggregators, and fintech partners
• The operational and financial burden of disputes, remediation, and customer restitution

The article highlights this clearly:

• 34% of regional bankers cite data liability as a major risk
• 42% of national bankers say the same
• 41% of credit unions also flag liability as a top concern

In a world where data flows across multiple entities, the question isn’t if liability will be tested – it’s when.

3. Legacy technology: the drag on progress

Open finance demands modern, secure, API‑driven infrastructure. Many institutions simply aren’t ready.

Community and regional banks in particular fear:

• Their legacy systems can’t support secure data sharing
• Integrations with third‑party providers will be brittle or expensive
• Tech debt will slow adoption and increase operational risk

The stats reinforce this:

• 33% of community bankers cite legacy systems as a major barrier
• 34% of regional bankers say the same
• 33% of national bankers also flag outdated tech as a risk
• 38% of credit unions are similarly concerned

Open finance isn’t plug‑and‑play. It’s a transformation – and many institutions are still running on infrastructure built for a different era.

4. Reputational damage: the risk that hits fast and hard

Regional banks are especially attuned to the reputational stakes.

They worry that:

• A breach or failed integration could erode customer trust overnight
• Customers will blame the bank, even if the failure originated with a third‑party provider
• Competitive pressure to adopt open finance quickly could lead to missteps

With 28% of regional bankers explicitly naming reputational damage as a key risk, it’s clear that trust – not technology – is the real currency at stake.

In short: a risk landscape defined by exposure, ambiguity, and fragility

The article paints a consistent picture: open finance introduces security exposure, liability uncertainty, and operational fragility.

The opportunity is real – but so is the risk. And the institutions that win will be the ones that treat risk not as a blocker, but something to be managed with intent.

What modern Open Finance Risk Management looks like 

1. Standardised accreditation of third‑party providers – only trusted, verified organisations able to gain access to customer accounts and financial data. 

2. Dynamic monitoring of risk indicators – near real‑time detection of anomalies, behavioural risk signals, and suspicious patterns across third‑party connections. 

3. Insurance‑backed warranty model – a tangible safeguard that reduces risk between banks and fintechs, turning assurance into something measurable, not theoretical.