UK smart data risk: we need real-time risk management
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, intermediaries, 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 include 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.
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. As such, financial institutions worry that they carry the lion's share of liability for fraud and data breach. Intermediaries 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. And end customers suffer financial loss, identity theft and reputational damage, all leading to an erosion of trust and a reluctance to share data.
Why regulation alone can't secure the smart data ecosystem
Regulators 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 patchwork with both gaps and overlaps, plus lengthy implementation timelines and potentially duplicative compliance burdens.
How Invela enables industry-led open finance risk management
First line of defence: accreditation that goes beyond compliance – Invela's sector-specific accreditation process, developed with a globally trusted ratings partner, vets intermediaries and third-party providers rigorously. Accreditation isn't a one-off – it's refreshed annually.
Second line of defence: behaviour-based risk scoring – Invela continuously monitors entity-level behaviour across thousands of data points. Banks, building societies, and intermediaries receive real-time alerts when a third-party provider breaches their individual risk appetite.
Third line of defence: risk transfer that works – when losses happen, Invela's insurance-backed warranty framework – in development - compensates financial institutions. 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.
