The UK’s smart data ecosystem is expanding rapidly – from open banking to open finance and cross-sector data sharing. But while innovation accelerates, third-party provider risk management lags behind, leaving banks, building societies, aggregators, third-party providers themselves – and, of course, end customers – vulnerable to risks that are becoming ever more distributed, opaque, and sophisticated. Third-party provider risks such as third-party impersonation, weak consent management, mobile app vulnerabilities, payment redirection and data breach – and of course, the risk that sometimes things just fall over, like PayPal’s fraud filters, the failure of which allowed €10 billion in unchecked debits to flood European banks… 

This blog explores the impact of these third-party provider risks and how Invela’s Open Finance Risk Management framework addresses them.

Who is liable for open finance fraud and data breaches? 

Banks and building societies are concerned about the potential for fraud or data breaches arising from third-party provider access – particularly when factoring in those fourth, fifth and nth party providers that connect into the ecosystem via third-party providers.  As such, Financial Institutions worry that they carry the lions’ share of liability for fraud and data breach, unsure as to whether a third-party’s Professional Indemnity Insurance would cover the fallout. Aggregators are blamed when things go wrong, despite limited control over downstream providers. Third-party providers – especially unregulated, subscale or underfunded ones – run the risk of being compromised by malicious actors without always having the depth of experience or pocket to adequately defend themselves. And end customers suffer financial loss, but also identity theft and reputational damage, all leading to an erosion of trust and a reluctance to share data – and because they’re the source of data and the intended beneficiaries, if end customers opt out, the smart data ecosystem simply loses its purpose. 

The risks are known and understood, but no-one is tracking the full impact. While individual banks and building societies monitor fraud and breaches within their own perimeter, few are tracing incidents back to third-party access via open banking or open finance. As a result, organisations like Cifas lack the visibility to assess third-party provider risk in aggregate. meaning the sector remains blind to the financial exposure, reputational fallout, and systemic fragility that third-party failures unleash. 

Why regulation alone can’t secure the smart data ecosystem 

Regulators are the architects and guardians of the smart data ecosystem but are constrained to acting only within their often sector-specific remit, in a world where smart data will increasingly flow across sectors.  Any regulator-led solution would necessarily be a something of a patchwork with both gaps and overlaps, plus lengthy implementation timelines and potentially duplicative compliance burdens.   

How Invela enables industry-led Open Finance Risk Management 

To scale smart data from open banking to open finance safely in line with the ambitions of the Data Use and Access Act, we need coordinated, proactive, and transparent risk management. That’s exactly what Invela delivers. 

• First line of defence: accreditation that goes beyond compliance – Invela’s sector-specific accreditation process, developed with a globally trusted ratings partner, vets aggregators and third-party providers rigorously. It complements existing frameworks and extends protection to the unregulated ecosystem. Accreditation isn’t a one-off – it’s refreshed annually.  

• Second line of defence: behaviour-based risk scoring – accreditation is just the start. Invela continuously monitors entity-level behaviour across thousands of data points. Banks, building societies, and aggregators receive real-time alerts when a third-party provider breaches their individual risk appetite – enabling proactive access revocation before damage occurs and contagion spreads. 

• Third line of defence: risk transfer that works – when losses happen, Invela’s insurance-backed warranty framework compensates data holders. It’s efficient, fair, and informed by real-time intelligence. 

• Governance that builds trust – the Invela Network is governed by transparent, non-discriminatory protocols. No exclusionary practices. Just fair, accountable market participation. 

Scale your defences. Join the Invela Network 

Banks, building societies, aggregators, and third-party providers: join the Invela Network. Protect your customers, your reputation, and the ecosystem itself.