From LifeSiteNews

By David James

The experience with open banking so far suggests that the benefits are mostly exaggerated and that, while it does not necessarily increase the risk of fraud, it does not eliminate it either. It just shifts the dangers elsewhere.

The Canadian government is setting the stage to bring in what is termed “open banking.”

It is described as a “secure way” for customers to share their financial data with financial technology companies (fintechs or fintech apps). The holders of the account do not have to provide their online banking usernames and passwords. Instead, the data is shared by the customer’s bank with the fintech company, or app, through an online channel.

Open banking is often contrasted with what is called screen scraping, which is when the third party is provided with the online banking username and password, enabling them to log in directly to the bank account as if they were the customer.

Open banking has been adopted by 68 countries, including the United Kingdom and Australia. The U.S. Congress passed the necessary legislation to set it up in 2010, but it was not until last October that the Consumer Financial Protection Bureau (CFPB) issued a proposed rule necessary for implementation.

The experience with open banking so far suggests that the benefits are mostly exaggerated and that, while it does not necessarily increase the risk of fraud, it does not eliminate it either. It just shifts the dangers elsewhere.

The greatest peril is fraudulent account linking: unauthorized connections between customer accounts and third-party applications. This can be done by linking the victim’s financial account to an app controlled by the fraudster, allowing unauthorized access to the person’s funds. Or, the fraudster’s financial account can be linked to a victim’s third-party app, allowing scammers to transfer funds into their account. Substantial sums of money can be stolen before the victim becomes aware of the breach.

Such risks are commonplace in the digital banking environment. For instance, in Australia, according to the Australian Bureau of Statistics, credit card fraud affected 8.7 per cent of the population in 2022-23. The average amount stolen, however, was only $A200 and only 18 per cent had more than $A1000 taken. With open banking, if there is a breach, any sums stolen are likely to be much larger.

Neither is there any reason to think open banking is completely secure just  because customers do not reveal their username and password. The Australian Banking Association warned that, after cyberattacks on the government medical insurer Medibank and telco Optus, “the engagement of a third party standing in the shoes of the customer … introduces a range of new risks for which banks may need to develop specific scam, fraud and cyber mitigation tools.”

According to research by financial advisory company Konsentus, the adoption of open banking has been strongest in Asia. In the U.S., customers have a strong attraction to credit cards and the rewards on offer. That is expected to represent a big barrier to take up. In Britain participation has “plateaued,” according to The Open Banking Impact Report (OBI report).

What are the advantages of open banking? According to the OBI report open banking has become a “critical component of cloud accounting” in Britain, which is helping smaller businesses track their financial positions more accurately. It is claimed that giving more entities access to customers’ financial data also increases competition.

Open banking is supposedly more efficient. The fintech company Gocardless contends that: “bank-to-bank payments are fully integrated and use a digital pull-based mechanism, where the merchant requests payment. In contrast, manual bank payments or card payments require the customer to send the payment to the business. Bank-to-bank payments tend to have lower failure rates compared to credit/debit card methods. Thus, businesses spend less time chasing missed payments.”

Another more doubtful claim is that open banking will make things easier for lenders. Abhigyan Shrivastava, leader in banking and technology transformation for Bendigo and Adelaide Bank writes that open banking is: “set to have a significant impact on lending transformation in Australia… with increased competition, personalized lending products, and more efficient lending processes.”

There is little reason, however, to think that better exposure to borrowers’ data will make any difference to lending practices. It will still be a matter of borrowers being able to provide enough collateral to qualify for a loan and to demonstrate they have sufficient income to pay the interest. In other words, banking as usual.

What is most likely is that the benefits of the initiative will primarily go to the banks and financial technology companies. That these entities argue, unconvincingly, that open banking is more “customer-centric” rouses the suspicion that ordinary customers will ultimately gain little.

From LifeSiteNews

By Calvin Freiburger

Many consider investing in gold a key measure for economic security against both the economic harm of inflationary government spending and the advent of central bank digital currencies around the world.

Gold jumped to a record price of $2,220.89 in early trading this week before retreating Thursday, amid foreign governments buying up more of the precious metal to brace for changing economic conditions and expectations that the U.S. Federal Reserve will cut interest rates.

Bloomberg reports that gold’s price set a new record, rising 1.6% before dropping 0.9%, continuing an overall rise of almost 10% over the past month. The news follows China and other central banks stocking up on gold, and is considered particularly noteworthy that higher prices have persisted despite high interest rates.

Fortune explains that investors had expected Federal Reserve Chair Jerome Powell to tease a continuation of high interest rates; instead he announced at a press conference this week that the data hasn’t “really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road towards 2%.”

This “dovish surprise” has “boosted the attractiveness of holding gold as an asset” through lower borrowing costs, according to TradeStation senior market analyst David Morrison.

Opinions are divided as to how much more attractive it will become for how long. Morrison warns that precious metal investors “should be prepared for a profit-taking pullback which may take the gloss off the latest move higher,” while Bank of America analysts say gold remains “one of our favorite trades for 2024. More investors could enter the market if yields fall and could help push the gold price to Paul Ciana’s potential long-term upside [target] around $2500-$2600.”

“What we saw last night was the green light really for gold traders to come back in,” said Chris Weston, head of research for Pepperstone Group Ltd. Marcus Garvey, head of commodities strategy at Macquarie Group Ltd., added that he considers a gold price as high as $2,300 a “reasonable target…I think the Fed not taking the opportunity of recently firmer inflation to lean hawkish at their meeting yesterday means gold is now going into a short-term overshoot scenario.”

Many consider investing in gold a key measure for economic security against not only the economic harm of inflationary government spending, but the international trend of central bank digital currencies potentially making individuals’ ability to provide for their families contingent on systems that could be used to more easily track or restrict individuals’ movements, invade their privacy, and limit their economic choices, eventually with the potential to even make the ability to pay for anything contingent on compliance with the ideological values of those in power.