Open banking is a vital tool for improving collections. But when paired with legacy software, this opportunity quickly becomes a liability. Organizations that handle sensitive customer information must be aware of the dangers of combining open banking with legacy systems. This article explores the potential pitfalls and how companies can avoid these risks to ensure secure and efficient debt collection processes.
Open banking is an untapped opportunity to enhance collections, especially in the critical pre-delinquency phase. In this article, we’ll explore what open banking is, its relationship to collections, and how it can be leveraged to improve outcomes for both financial institutions and customers.
The key risks of legacy software in an era of open banking
Legacy software can’t handle the data-sharing environment of open banking. It lacks the flexibility, security, and integration capabilities to support the seamless processing of banking data.
Security vulnerabilities
Legacy systems are susceptible to cyberattacks since they’re not supported with regular security updates. This risk of a data breach increases significantly with open banking as outdated encryption methods and patching delays make the system vulnerable to exploitation.
Reputational damage
A data breach with open banking brings irreparable reputational damage from exposing sensitive information from other banks as well as your own. The long-term impact can be devastating, making recovery both financially and reputationally difficult.
Non-compliance with regulations
Regulatory frameworks such as the Telephone Consumer Protection Act (TCPA) and the Gramm-Leach-Bliley Act (GLBA) have strict requirements on the handling of consumer data. Legacy software, which is often outdated and unsupported, fails to meet these modern compliance standards. This exposes companies to fines, legal risks, and operational restrictions for non-compliance.
Switch to a configurable collections platform to protect your customers and reputation
To mitigate the risks of open banking with legacy software, you need to upgrade to modern, secure platforms that are designed to handle open banking data efficiently and safely.
- Security with cloud-native infrastructure: Modern, cloud-native solutions come with the scalability and security needed to process open banking data securely. These platforms receive regular updates, patch security vulnerabilities automatically, and feature robust encryption protocols to protect from data breaches and other cybersecurity risks.
- Harness a decision engine for secure data access: Decision engines can access open banking data in real time without storing it, reducing the risk of a data breach. By processing only the necessary information, they enhance security and ensure compliance while maximizing the potential of open banking data to improve customer outcomes.
- Continuous compliance: Adopting a platform that supports real-time decision-making and auditability will help you stay on top of compliance and avoid costly penalties. They make it simple to conduct regular security audits and compliance reviews to ensure systems remain up to date with legal requirements.
Keep your data secure and improve customer outcomes with C&R Software
To take full advantage of open banking, you need to upgrade from legacy software or you place your reputation and customer data at risk. This is why C&R Software offers the modern, cloud-native solutions needed to navigate open banking securely and efficiently.
Our highly configurable platforms provide the scalability, real-time decisioning, and
compliance capabilities that legacy systems simply can’t match. By leveraging advanced rules engines and secure data access, C&R Software helps organizations protect sensitive customer information, maintain regulatory compliance, and improve collections outcomes. Contact us today to learn how we can transform your collections strategy and safeguard your operations.
