Balancing Innovation and Security: Data Privacy Challenges in Open Banking and API-Driven Financial Services

This study examines the impact of API-based financial services and open banking on market competition, customer trust, and data privacy, highlighting key challenges such as compliance complexities, unauthorized access, and data breaches.The research explores cybersecurity threats, regulatory requirements, and technological advancements influencing data security.Mitigation measures, such as regulatory frameworks and technological safeguards, are analysed to improve security while fostering innovation.Findings show that improving API security, authentication protocols, and regulatory compliance is critical for a secure open banking ecosystem.A balance between innovation and security measures will improve consumer trust and facilitate the sustainable growth of digital financial services.