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• How to Increase Conversions With Form Analysis

  30 janvier 2024, par Erin

  Forms are one of the most important elements of your website. They are also one of the most difficult elements to analyse and improve. 

  Unlike a webpage, forms aren’t all that easy to analyse with standard web analytics tools. You need to learn how to conduct form analysis if you want to improve your forms’ conversion rates and increase revenue. 

  In this article, we’ll explain what form analysis is and why conducting a thorough form analysis is so important. 

  What is form analysis ?

  Form analysis is a process that measures the effectiveness of your forms. Form analysis uses several tools and techniques like a form analytics platform, heatmaps, and session recordings to collect user data and understand how visitors behave when filling in forms. 

  The goal is to improve the design and effectiveness of your forms, reducing abandonment rate and encouraging more users to submit them. 

  There are plenty of reasons visitors could be having trouble with your forms, from confusing form fields to poor design and lengthy verification processes. Form analytics can help you pinpoint why your form’s conversion rate is so low or why so many users abandon your form halfway through filling it in. 

  Why is form analysis important ?

  Website forms have some of the highest bounce rates and abandonments of any website element. By analysing your forms, you can achieve the following outcomes :

  

  Reduce form abandonment

  When it’s tough enough to get users to start filling in your form, the last thing you want them to do is abandon it halfway through. But that’s probably what your users are doing more than you’d like to think. 

  Why are they abandoning it ? Even if you’re humble enough to admit you didn’t create the greatest form the world’s ever seen, it can still be incredibly difficult to pin down why users give up on your form.

  That’s unless you conduct a form analysis. By analysing metrics and user behaviour, you can pinpoint and rectify the issues that cause users to abandon your form. 

  Improve the user experience

  Best practices will only take you so far. How users behave when filling in a form on your website may be completely different to how they behave on another site. That’s why you need to use form analysis to understand how users behave specifically on your website — and then use that information to optimise the design, layout, and content of the form to better suit them. 

  If one field is regularly left empty, for example, you can delete it. If users spend several minutes filling out a form with a high abandonment rate, you could shorten it. 

  The goal isn’t to make the best form ever but to make the best form for your audience. 

  Increase conversions

  Ultimately, form analysis helps you improve your form’s most important metric : conversions. Reducing your abandonment rate will naturally lead to more completions, but so will taking advantage of other optimisation opportunities that only become clear with form analysis. This can include optimisations like :

  • Moving the form higher up on the page
  • Shortening the form
  • Changing the heading and CTAs
  • Renaming field labels 

  A thorough form analysis process can ensure your forms generate as many conversions as possible. 

  Why do users abandon forms ?

  Are you already suffering from high form abandonment rates ? Don’t worry, you’re not alone. Marketers regularly make the same mistakes when creating forms that cause users to give up halfway through completion.

  Here are some of the most common reasons for form abandonment :

  • There are too many steps. If you’re telling users they’ve just completed step 2 of 12, you can bet they won’t bother finishing your form. 
  • They ask for too much information. No one wants to fill out a long form, and often, users won’t have the information on hand if you ask for too much. Just look at the rate left blank from the Unneeded Fields report in the screenshot below :

  

  • The form is confusing. Unclear form fields or directions can put users off. 
  • All the fields are free text and time-consuming. Filling out forms with long text fields takes too much time. To speed things up, use dropdown options in the fields, but keep the options to a minimum. This not only helps users finish the form faster but also makes it easier to analyse the data later because it keeps the data format consistent so you can organise the information more efficiently. 
  • Users don’t trust the form. This is a particular problem on checkout pages where users are entering sensitive information.

  How to conduct form analysis

  You need to collect user behaviour data to effectively analyse your forms. But a lot of traditional website analytics tools won’t have the required functionality. 

  Matomo is different. Our web analytics solution offers comprehensive web analytics as well as additional features like Heatmaps, Session Recordings, A/B Testing, and Form Analytics to provide all the functionality you need. 

  Now if you don’t use Matomo, you can try it free for 21 days (no credit card required) to see if it’s the right tool for you.

  Whether you use Matomo or not is up to you. But, once you have a suitable tool in place, just follow the steps below to conduct a form analysis. 

  Check your analytics

  Tracking and analysing specific form metrics should be the first place you start. We recommend collecting data on the following metrics :

  • Form starter rate : the percentage of visitors who actually start to fill in your form
  • Completion rate : the percentage of visitors who complete the form
  • Form abandonment rate : the percentage of users who gave up filling in your form
  • Time spent completing your form : the average length of time users spend on your form

  Let’s look at these metrics are in Matomo’s Form Analytics :

  

  The dashboard shows an overview of these metrics over a given period, allowing you to see at a glance whether there are issues you need to rectify. 

  Next, deep dive into the performance of each form to see things like :

  • Drop off fields
  • Unused fields
  • Entry field
  • Most corrected fields 

  You can even use Matomo’s visitor log to see who’s behind every submission.

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  Use a heatmap

  A heatmap is a colour-based graphical representation of data. A heatmap will show what users to do on your website, including : 

  • How far they scroll
  • Which buttons they click on
  • Where they focus their attention

  When used on a webpage with a form, you’ll be able to see how often users interact with your form based on the heatmap colour, with warmer colours representing greater engagement levels.

  Let’s look at a heatmap in Matomo :

  

  This heatmap is showing us how far down users have scrolled. It’s clear that only 63% of visitors are reaching the point above our call to action to see all features. We might want to consider moving that call to action up in order to get more engagement. 

  A heatmap is a great way to see whether your form’s placement gets the level of attention you want from visitors and to what extent visitors interact with your field.

  Record user sessions

  Session replays go even further than heatmaps, recording a real-life user interacting with your site. It’s like looking over a visitor’s shoulder while they use your site.

  

  With Matomo, you can record any sessions where the user takes a certain action (like starting to fill in a form), allowing you to build a rich library of qualitative data. 

  You can then replay a recorded session at your leisure to understand exactly how users interact with your forms.

  Segment users

  If you really want to understand how visitors use your forms, then it’s essential to segment your data. 

  You can segment all Form Analytics reports by over 100 pre-built segments in Matomo.

  

  One way to segment your data is by comparing the average time on form of those who completed the form with those who abandoned it. 

  If users abandon a form quickly, that could indicate your form is irrelevant to this audience or too long. If users spend a lot of time on the form, however, it’s probably safe to assume that it is relevant but there is something wrong with the form itself. 

  Looking at the Field Timings report will help you pinpoint which field visitors are spending the most time on and causing frustration. 

  

  The Field Timings example report in Matomo above, it’s evident that the “Overview of your needs” field takes up the most time (avg. time spent is 1 min 40s). To improve this, we might want to change it to a dropdown field. This way, users can quickly select options, and if necessary, provide additional details.

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  Another way is to segment data by traffic source and compare each source’s conversion rate. This will show whether one traffic source converts better than another or if one source isn’t interested in your form at all.

  How to optimise web forms

  Want to implement what you’ve learnt from your form analysis ? Follow these steps to optimise your existing web forms. 

  Define your form’s purpose

  The first step in optimising your existing web forms is to give a clear and definitive purpose to every single one. 

  When you have a defined goal, creating a form users will complete is much easier. After all, if you don’t know why people should fill in one of your forms, how would a visitor possibly know ?

  Take a look at one of our forms below :

  

  The purpose of this form is to get users to sign up for a free trial of our web analytics platform, and every element works towards that goal :

  • The headline directs the user to take action
  • The copy explains that it’s a free trial that doesn’t require credit card details
  • The green call-to-action button reinforces the action and benefit 
  • There is validation to support this under the form – “Trusted on over 1 million websites in over 190+ countries”

  Our clear instructions leave users no doubt about why they should fill in the form or what will happen. 

  Choose the right type of form

  You can use several forms on your website, each with different designs, form fields, and goals.

  For example :

  • Registration forms are fairly minimalist and designed to collect the least amount of data possible. 
  • Contact forms are concise so that it’s easy for potential customers to reach your team. 
  • Checkout forms balance a need to collect important data with a streamlined design that doesn’t put users off.
  • Lead generation forms are compelling and usually include qualifying questions so sales teams can score leads.

  Make sure you are using the right type of form to avoid abandonments and other issues. For example, requiring users to fill in a lengthy lead generation-style form when you want them to sign up for a free trial will probably kill your conversion rate. 

  Test form elements

  If your form analysis has shed light on one or two issues, you can use A/B or multivariate testing to trial new elements or designs and see how they compare.

  There’s no shortage of elements you can test, including the form’s :

  • Headline
  • Placement
  • Design
  • CTA button
  • Colour-scheme
  • Length
  • Form fields

  

  Matomo makes it easy to create and run A/B tests on your website’s forms. 

  Move your form above the fold

  One of the simplest ways to optimise your web form is to move it above the fold — that’s the section of the screen users see when they load your page. 

  Why ? Well, the more people who see your form, the more people will fill it in. And when it’s above the fold, users can’t help but see it.

  Conclusion

  Forms are one of the most important elements on your website, so why not treat them as such and regularly run a thorough form analysis ? By doing so, you’ll identify ways to optimise your form, improve the user experience, and improve conversions. 

  Matomo is the best platform for conducting form analysis. Our combination of web analytics, Form Analytics, Session Recordings, and Heatmaps means you have all the tools you need to learn exactly how visitors interact with your forms. 

  See just how powerful Matomo’s tools are by starting a free 21-day trial, no credit card required. 

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• 6 Crucial Benefits of Conversion Rate Optimisation

  26 février 2024, par Erin

  Whether investing time or money in marketing, you want the best return on your investment. You want to get as many customers as possible with your budget and resources.

  That’s what conversion rate optimisation (CRO) aims to do. But how does it help you achieve this major goal ? 

  This guide explores the concrete benefits of conversion rate optimisation and how they lead to more effective marketing and ROI. We’ll also introduce specific CRO best practices to help unlock these benefits.

  What is conversion rate optimisation ?

  Conversion rate optimisation (CRO) is the process of examining your website for improvements and creating tests to increase the number of visitors who take a desired action, like purchasing a product or submitting a form.

  The conversion rate is the percentage of visitors who complete a specific goal.

  

  In order to improve your conversion rate, you need to figure out :

  • Where your customers come from
  • How potential customers navigate or interact with your website
  • Where potential customers are likely to exit your site (or abandon carts)
  • What patterns drive valuable actions like sign-ups and sales

  From there, you can gradually implement changes that will drive more visitors to convert. That’s the essence of conversion rate optimisation.

  6 top benefits of conversion rate optimisation (and best practices to unlock them)

  Conversion rate optimisation can help you get more out of your campaigns without investing more. CRO helps you in these six ways :

  1. Understand your visitors (and customers) better

  The main goal of CRO is to boost conversions, but it’s more than that. In the process of improving conversion rates, you’ll also benefit by gaining deep insights into user behaviour, preferences, and needs. 

  Using web analytics, tests and behavioural analytics, CRO helps marketers shape their website to match what users need.

  Best practices for understanding your customer :

  First, analyse how visitors act with full context (the pages they view, how long they stay and more). 

  In Matomo, you can use the Users Flow report to understand how visitors navigate through your site. This will help you visualise and identify trends in the buyer’s journey.

  

  Then, you can dive deeper by defining and analysing journeys with Funnels. This shows you how many potential customers follow through each step in your defined journey and identify where you might have a leaky funnel. 

  

  In the above Funnel Report, nearly half of our visitors, just 44%, are moving forward in the buyer’s journey after landing on our scuba diving mask promotion page. With 56% of potential customers dropping off at this page, it’s a prime opportunity for optimising conversions.

  Think of Funnels as your map, and pages with high drop-off rates as valuable opportunities for improvement.

  Once you notice patterns, you can try to identify the why. Analyse the pages, do user testing and do your best to improve them.

  2. Deliver a better user experience

  A better understanding of your customers’ needs means you can deliver a better user experience.

  

  For example, if you notice many people spend more time than expected on a particular step in the sign-up process, you can work to streamline it.

  Best practices for improving your user experience : 

  To do this, you need to come up with testable hypotheses. Start by using Heatmaps and Session Recordings to visualise the user experience and understand where visitors are hesitating, experiencing points of frustration, and exiting. 

  You need to outline what drives certain patterns in behaviour — like cart abandonment for specific products, and what you think can fix them.

  

  Let’s look at an example. In the screenshot above, we used Matomo’s Heatmap feature to analyse user behaviour on our website. 

  Only 65% of visitors scroll down far enough to encounter our main call to action to “Write a Review.” This insight suggests a potential opportunity for optimisation, where we can focus efforts on encouraging more users to engage with this key element on our site.

  Once you’ve identified an area of improvement, you need to test the results of your proposed solution to the problem. The most common way to do this is with an A/B test. 

  This is a test where you create a new version of the problematic page, trying different titles, comparing long, and short copy, adding or removing images, testing variations of call-to-action buttons and more. Then, you compare the results — the conversion rate — against the original. With Matomo’s A/B Testing feature, you can easily split traffic between the original and one or more variations.

  

  In the example above from Matomo, we can see that testing different header sizes on a page revealed that the wider header led to a higher conversion rate of 47%, compared to the original rate of 35% and the smaller header’s 36%.

  Matomo’s report also analyses the “statistical significance” of the difference in results. Essentially, this is the likelihood that the difference comes from the changes you made in the variation. With a small sample size, random patterns (like one page receiving more organic search visits) can cause the differences.

  If you see a significant change over a larger sample size, you can be fairly certain that the difference is meaningful. And that’s exactly what a high statistical significance rating indicates in Matomo. 

  Once a winner is identified, you can apply the change and start a new experiment. 

  3. Create a culture of data-driven decision-making

  Marketers can no longer afford to rely on guesswork or gamble away budgets and resources. In our digital age, you must use data to get ahead of the competition. In 2021, 65% of business leaders agreed that decisions were getting more complex.

  CRO is a great way to start a company-wide focus on data-driven decision-making. 

  Best practices to start a data-driven culture :
  

  Don’t only test “hunches” or “best practices” — look at the data. Figure out the patterns that highlight how different types of visitors interact with your site.

  Try to answer these questions :

  • How do our most valuable customers interact with our site before purchasing ?
  • How do potential customers who abandon their carts act ?
  • Where do our most valuable customers come from ?

  Moreover, it’s key to democratise insights by providing multiple team members access to information, fostering informed decision-making company-wide.

  4. Lower your acquisition costs and get higher ROI from all marketing efforts

  Once you make meaningful optimisations, CRO can help you lower customer acquisition costs (CAC). Getting new customers through advertising will be cheaper.

  As a result, you’ll get a better return on investment (ROI) on all your campaigns. Every ad and dollar invested will get you closer to a new customer than before. That’s the bottom line of CRO.

  Best practices to lower your CAC (customer acquisition costs) through CRO adjustments :

  The easiest way to lower acquisition costs is to understand where your customers come from. Use marketing attribution to track the results of your campaigns, revealing how each touchpoint contributes to conversions and revenue over time, beyond just last-click attribution.

  You can then compare the number of conversions to the marketing costs of each channel, to get a channel-specific breakdown of CAC.

  This performance overview can help you quickly prioritise the best value channels and ads, lowering your CAC. But these are only surface-level insights. 

  You can also further lower CAC by optimising the pages these campaigns send visitors to. Start with a deep dive into your landing pages using features like Matomo’s Session Recordings or Heatmaps.

  They can help you identify issues with an unengaging user experience or content. Using these insights, you can create A/B tests, where you implement a new page that replaces problematic headlines, buttons, copy, or visuals.

  

  When a test shows a statistically significant improvement in conversion rates, implement the new version. Repeat this over time, and you can increase your conversion rates significantly, getting more customers with the same spend. This will reduce your customer acquisition costs, and help your company grow faster without increasing your ad budget.

  5. Improve your average order value (AOV) and customer lifetime value (CLV)

  CRO isn’t only about increasing the number of customers you convert. If you adapt your approach, you can also use it to increase the revenue from each customer you bring in. 

  But you can’t do that by only tracking conversion rates, you also need to track exactly what your customers buy.

  If you only blindly optimise for CAC, you even risk lowering your CLV and the overall profitability of your campaigns. (For example, if you focus on Facebook Ads with a $6 CAC, but an average CLV of $50, over Google Ads with a $12 CAC, but a $100 CLV.)

  Best practices to track and improve CLV :

  First, integrate your analytics platform with your e-commerce (B2C) or your CRM (B2B). This will help you get a more holistic view of your customers. You don’t want the data to stop at “converted.” You want to be able to dive deep into the patterns of high-value customers.

  The sales report in Matomo’s ecommerce analytics makes it easy to break down average order value by channels, campaigns, and specific ads.

  

  In the report above, we can see that search engines drive customers who spend significantly more, on average, than social networks — $241 vs. $184. But social networks drive a higher volume of customers and more revenue.

  To figure out which channel to focus on, you need to see how the CAC compares to the AOV (or CLV for B2B customers). Let’s say the CAC of social networks is $50, while the search engine CAC is $65. Search engine customers are more profitable — $176 vs. $134. So you may want to adjust some more budget to that channel.

  To put it simply :

  Profit per customer = AOV (or CLV) – CAC

  Example :

  • Profit per customer for social networks = $184 – $50 = $134
  • Profit per customer for search engines = $241 – $65 = $176

  You can also try to A/B test changes that may increase the AOV, like creating a product bundle and recommending it on specific sales pages.

  An improvement in CLV will make your campaigns more profitable, and help stretch your advertising budget even further.

  6. Improve your content and SEO rankings

  A valuable side-effect of focusing on CRO metrics and analyses is that it can boost your SEO rankings. 

  How ? 

  CRO helps you improve the user experience of your website. That’s a key signal Google (and other search engines) care about when ranking webpages. 

  

  For example, Google’s algorithm considers “dwell time,” AKA how long a user stays on your page. If many users quickly return to the results page and click another result, that’s a bad sign. But if most people stay on your site for a while (or don’t return to Google at all), Google thinks your page gives the user their answer.

  As a result, Google will improve your website’s ranking in the search results.

  Best practices to make the most of CRO when it comes to SEO :

  Use A/B Testing, Heatmaps, and Session Recordings to run experiments and understand user behaviour. Test changes to headlines, page layout, imagery and more to see how it impacts the user experience. You can even experiment with completely changing the content on a page, like substituting an introduction.

  Bring your CRO-testing mindset to important pages that aren’t ranking well to improve metrics like dwell time.

  Start optimising your conversion rate today

  As you’ve seen, enjoying the benefits of CRO heavily relies on the data from a reliable web analytics solution. 

  But in an increasingly privacy-conscious world (just look at the timeline of GDPR updates and fines), you must tread carefully. One of the dilemmas that marketing managers face today is whether to prioritise data quality or privacy (and regulations).

  With Matomo, you don’t have to choose. Matomo values both data quality and privacy, adhering to stringent privacy laws like GDPR and CCPA.

  Unlike other web analytics, Matomo doesn’t sample data or use AI and machine learning to fill data gaps. Plus, you can track without annoying visitors with a cookie consent banner – so you capture 100% of traffic while respecting user privacy (excluding in Germany and UK).

  And as you’ve already seen above, you’ll still get plenty of reports and insights to drive your CRO efforts. With User Flows, Funnels, Session Recordings, Form Analytics, and Heatmaps, you can immediately find insights to improve your bottom line.

  And our built-in A/B testing feature will help you test your hypotheses and drive reliable progress. If you’re ready to reliably optimise conversion rates (with accuracy and without privacy concerns), try Matomo for free for 21 days. No credit card required.

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• Open Banking Security 101 : Is open banking safe ?

  3 décembre 2024, par Daniel Crough — Banking and Financial Services

  Open banking is changing the financial industry. Statista reports that open banking transactions hit $57 billion worldwide in 2023 and will likely reach $330 billion by 2027. According to ACI, global real-time payment (RTP) transactions are expected to exceed $575 billion by 2028.

  Open banking is changing how banking works, but is it safe ? And what are the data privacy and security implications for global financial service providers ?

  This post explains the essentials of open banking security and addresses critical data protection and compliance questions. We’ll explore how a privacy-first approach to data analytics can help you meet regulatory requirements, build customer trust and ultimately thrive in the open banking market while offering innovative financial products.

   

  

  

  EU Financial Services Analytics Maturity Report

  Discover trends, strategies, and opportunities to balance compliance and competitiveness.

  Download the report now

  What is open banking ?

  Open banking is a system that connects banks, authorised third-party providers and technology, empowering customers to securely share their financial data with other companies. At the same time, it unlocks access to more innovative and personalised financial products and services like spend management solutions, tailored budgeting apps and more convenient payment gateways. 

  With open banking, consumers have greater choice and control over their financial data, ultimately fostering a more competitive financial industry, supporting technological innovation and paving the way for a more customer-centric financial future.

  Imagine offering your clients a service that analyses spending habits across all accounts — no matter the institution — and automatically finds ways to save them money. Envision providing personalised financial advice tailored to individual needs or enabling customers to apply for a mortgage with just a few taps on their phone. That’s the power of open banking.

  Embracing this technology is an opportunity for banks and fintech companies to build new solutions for customers who are eager for a more transparent and personalised digital experience.

  How is open banking different from traditional banking ?

  In traditional banking, consumers’ financial data is locked away and siloed within each bank’s systems, accessible only to the bank and the account holder. While account holders could manually aggregate and share this data, the process is cumbersome and prone to errors.

  With open banking, users can choose what data to share and with whom, allowing trusted third-party providers to access their financial information directly from the source. 

  

  How does open banking work ?

  The technology that makes open banking possible is the application programming interface (API). Think of banking APIs as digital translators for different software systems ; instead of translating languages, they translate data and code.

  The bank creates and publishes APIs that provide secure access to specific types of customer data, like credit card transaction history and account balances. The open banking API acts like a friendly librarian, ready to assist apps in accessing the information they need in a secure and organised way.

  Third-party providers, like fintech companies, use these APIs to build their applications and services. Some tech companies also act as intermediaries between fintechs and banks to simplify connections to multiple APIs simultaneously.

  For example, banks like BBVA (Spain) and Capital One (USA) offer secure API platforms. Fintechs like Plaid and TrueLayer use those banking APIs as a bridge to users’ financial data. This bridge gives other service providers like Venmo, Robinhood and Coinbase access to customer data, allowing them to offer new payment gateways and investment tools that traditional banks don’t provide.

  Is open banking safe for global financial services ?

  Yes, open banking is designed from the ground up to be safe for global financial services.

  Open banking doesn’t make customer financial data publicly available. Instead, it uses a secure, regulated framework for sharing information. This framework relies on strong security measures and regulatory oversight to protect user data and ensure responsible access by authorised third-party providers.

  In the following sections, we’ll explore the key security features and banking regulations that make this technology safe and reliable.

  Regulatory compliance in open banking

  Regulatory oversight is a cornerstone of open banking security.

  In the UK and the EU, strict regulations govern how companies access and use customer data. The revised Payment Services Directive (PSD2) in Europe mandates strong customer authentication and secure communication, promoting a high level of security for open banking services.

  To offer open banking services, companies must register with their respective regulatory bodies and comply with all applicable data protection laws.

  For example, third-party service providers in the UK must be authorised by the Financial Conduct Authority (FCA) and listed on the Financial Services Register. Depending on the service they provide, they must get an Account Information Service Provider (AISP) or a Payment Initiation Service Provider (PISP) license.

  Similar regulations and registries exist across Europe, enforced by the European National Competent Authority, like BaFin in Germany and the ACPR in France.

  In the United States, open banking providers don’t require a special federal license. However, this will soon change, as the U.S. Consumer Financial Protection Bureau (CFPB) unveiled a series of rules on 22 October 2024 to establish a regulatory framework for open banking.

  These regulations ensure that only trusted providers can participate in the open banking ecosystem. Anyone can check if a company is a trusted provider on public databases like the Regulated Providers registry on openbanking.org.uk. While being registered doesn’t guarantee fair play, it adds a layer of safety for consumers and banks.

  Key open banking security features that make it safe for global financial services

  Open banking is built on a foundation of solid security measures. Let’s explore five key features that make it safe and reliable for financial institutions and their customers.

  

  Strong Customer Authentication (SCA)

  Strong Customer Authentication (SCA) is a security principle that protects against unauthorised access to user financial data. It’s a regulated and legally required form of multi-factor authentication (MFA) within the European Economic Area.

  SCA mandates that users verify their identity using at least two of the following three factors :

  • Something they know (a password, PIN, security question, etc.)
  • Something they have (a mobile phone, a hardware token or a bank card)
  • Something they are (a fingerprint, facial recognition or voice recognition)

  This type of authentication helps reduce the risk of fraud and unauthorised transactions.

  API security

  PSD2 regulations mandate that banks provide open APIs, giving consumers the right to use any third-party service provider for their online banking services. According to McKinsey research, this has led to a surge in API adoption within the banking sector, with the largest banks allocating 14% of their IT budget to APIs. 

  To ensure API security, banks and financial service providers implement several measures, including :

  • API gateways, which act as a central point of control for all API traffic, enforcing security policies and preventing unauthorised access
  • API keys and tokens to authenticate and authorise API requests (the equivalent of a library card for apps)
  • Rate limiting to prevent denial-of-service attacks by limiting the number of requests a third-party application can make within a specific timeframe
  • Regular security audits and penetration testing to identify and address potential vulnerabilities in the API infrastructure

  Data minimisation and purpose limitation

  Data minimisation and purpose limitation are fundamental principles of data protection that contribute significantly to open banking safety.

  Data minimisation means third parties will collect and process only the data necessary to provide their service. Purpose limitation requires them to use the collected data only for its original purpose.

  For example, a budgeting app that helps users track their spending only needs access to transaction history and account balances. It doesn’t need access to the user’s full transaction details, investment portfolio or loan applications.

  Limiting the data collected from individual banks significantly reduces the risk of potential misuse or exposure in a data breach.

  Encryption

  Encryption is a security method that protects data in transit and at rest. It scrambles data into an unreadable format, making it useless to anyone without the decryption key.

  In open banking, encryption protects users’ data as it travels between the bank and the third-party provider’s systems via the API. It also protects data stored on the bank’s and the provider’s servers. Encryption ensures that even if a breach occurs, user data remains confidential.

  Explicit consent

  In open banking, before a third-party provider can access user data, it must first inform the user what data it will pull and why. The customer must then give their explicit consent to the third party collecting and processing that data.

  This transparency and control are essential for building trust and ensuring customers feel safe using third-party services.

  But beyond that, from the bank’s perspective, explicit customer consent is also vital for compliance with GDPR and other data protection regulations. It can also help limit the bank’s liability in case of a data breach.

  Explicit consent goes beyond sharing financial data. It’s also part of new data privacy regulations around tracking user behaviour online. This is where an ethical web analytics solution like Matomo can be invaluable. Matomo fully complies with some of the world’s strictest privacy regulations, like GDPR, lGPD and HIPAA. With Matomo, you get peace of mind knowing you can continue gathering valuable insights to improve your services and user experience while respecting user privacy and adhering to regulations.

  Risks of open banking for global financial services

  While open banking offers significant benefits, it’s crucial to acknowledge the associated risks. Understanding these risks allows financial institutions to implement safeguards and protect themselves and their customers.

  

  Risk of data breaches

  By its nature, open banking is like adding more doors and windows to your house. It’s convenient but also gives burglars more ways to break in.

  Open banking increases what cybersecurity professionals call the “attack surface,” or the number of potential points of vulnerability for hackers to steal financial data.

  Data breaches are a serious threat to banks and financial institutions. According to IBM’s 2024 Cost of a Data Breach Report, each breach costs companies in the US an average of $4.88 million. Therefore, banks and fintechs must prioritise strong security measures and data protection protocols to mitigate these risks.

  Risk of third-party access

  By definition, open banking involves granting third-party providers access to customer financial information. This introduces a level of risk outside the bank’s direct control.

  Financial institutions must carefully vet third-party providers, ensuring they meet stringent security standards and comply with all relevant data protection regulations.

  Risk of user account takeover

  Open banking can increase the risk of user account takeover if adequate security measures are not in place. For example, if a malicious third-party provider gains unauthorised access to a user’s bank login details, they could take control of the user’s account and make fraudulent bank transactions.

  A proactive approach to security, continuous monitoring and a commitment to evolving best practices and security protocols are crucial for navigating the open banking landscape.

  Open banking and data analytics : A balancing act for financial institutions

  The additional data exchanged through open banking unveils deeper insights into customer behaviour and preferences. This data can fuel innovation, enabling the development of personalised products and services and improved risk management strategies.

  However, using this data responsibly requires a careful balancing act.

  Too much reliance on data without proper safeguards can erode trust and invite regulatory issues. The opposite can stifle innovation and limit the technology’s potential.

  Matomo Analytics derisks web and app environments by giving full control over what data is tracked and how it is stored. The platform prioritises user data privacy and security while providing valuable data and analytics that will be familiar to anyone who has used Google Analytics.

  Open banking, data privacy and AI

  The future of open banking is entangled with emerging technologies like artificial intelligence (AI) and machine learning. These technologies significantly enhance open banking analytics, personalise services, and automate financial tasks.

  Several banks, credit unions and financial service providers are already exploring AI’s potential in open banking. For example, HSBC developed the AI-enabled FX Prompt in 2023 to improve forex trading. The bank processed 823 million client API calls, many of which were open banking.

  However, using AI in open banking raises important data privacy considerations. As the American Bar Association highlights, balancing personalisation with responsible AI use is crucial for open banking’s future. Financial institutions must ensure that AI-driven solutions are developed and implemented ethically, respecting customer privacy and data protection.

  Conclusion

  Open banking presents a significant opportunity for innovation and growth in the financial services industry. While it’s important to acknowledge the associated risks, security measures like explicit customer consent, encryption and regulatory frameworks make open banking a safe and reliable system for banks and their clients.

  Financial service providers must adopt a multifaceted approach to data privacy, implementing privacy-centred solutions across all aspects of their business, from open banking to online services and web analytics.

  By prioritising data privacy and security, financial institutions can build customer trust, unlock the full potential of open banking and thrive in today’s changing financial environment.