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6 TIPS FOR KEEPING DATA SECURE WHEN WORKING FROM HOME

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Tim Bandos, CISO at Digital Guardian

 

The importance of data in the financial sector has grown exponentially in recent years, with more and more institutions waking up to the pivotal role it plays in understanding customers, predicting trends and improving overall operational efficiency. However, as reliance on data continues to increase, so too does the need for proper data protection, which in many cases, is still lagging behind where it should be. Adding to this, the seismic shift in work habits over the last 12 months has seen much of the flow of data move out of institutions themselves and into the homes of remote working employees, where it can be much harder to control.

Understandably, the situation has many organisations worried, not least because of the threat of hefty fines and reputational damage resulting from even a minor data breach. Fortunately, there’s a number of relatively simple security tips and behaviours that institutions can pass onto employees, helping to maximise data protection, both for themselves and for their customers. Below are six of the most effective:

 

Keep passwords complex and varied

The humble password is still the first (and often only) line of defence against cybercrime. Unfortunately it is also the most overlooked layer of data protection. Strong passwords should contain uppercase and lowercase letters, numbers and special characters. Employees should also avoid using easily guessed words or alphanumeric combinations, such as the names of pets, birthdays, or other information that can be easily found by looking at a Facebook profile or performing a quick online search.

 

Tim Bandos

Avoid suspicious links or emails

Another security 101 lesson that’s easy to forget in a chaotic home working environment. If employees receive an email from an unknown source they shouldn’t open it, and they certainly shouldn’t click on any links or file attachments contained within it. If unsure, hovering a cursor over an email link will bring up a box stating exactly where the link goes (which often differs from the text in the email received). Clicking on an infected link can have dire consequences, potentially compromising the organisation’s entire network and allowing attackers to steal all kinds of sensitive data. As such, it’s vital that employees are regularly reminded of the importance of strong email discipline, particularly when working from home.

 

Keep personal information close to your chest

This applies in all aspects of life, not just working environments. Social engineering is another method criminals regularly use to glean sensitive passwords and information from unsuspecting employees. Often they will pretend to be a bank, credit card company, or other reputable entity and use scare tactics to make victims hand over information. For instance, they might say ‘we’re calling from your bank because we suspect fraudulent activity is in progress on your account. If you provide your card details now we can verify your ID and block the activity right away’.

Employees must always be vigilant to this kind of approach. If in any doubt about the authenticity of the caller, they should hang up and call the organisation they claimed to be from back via authorised channels.

 

Bolster your security with two-factor authentication

Two-factor authentication (2FA) is a great additional layer of security in the event that a hacker or fraudster manages to successfully guess a password.  Once enabled, it requires a second verification step, such as the answer to a secret question or a personal identification number (PIN), which is usually sent to a second trusted device for added security. 2FA is now much more widely available than it used to be, with nearly all major application providers offering it. Consequently, employees should opt to enable it whenever the option is available.

 

Install any new patches immediately

Every day, a slew of new vulnerabilities are found in even the most popular and widely used online tools/applications. Fortunately, the likes of Microsoft, Amazon and Google have an army of security professionals at their disposal to create new security patches that close these vulnerabilities as soon as they are found. However, the patches only take effect once installed, which is why it’s crucial for employees to install them immediately. Any delay just extends the window that criminals have to exploit the vulnerability, therefore increasing the risk to the entire organisation.

 

Keep devices switched off

Most employees think nothing of simply shutting their laptop when they finish work, which puts it in sleep mode. However, for the sake of the extra 30 seconds it takes to boot up the next morning, it is much more secure to switch it off completely. This is because leaving computing devices switched on overnight, and most often, connected to the Internet, leaves them vulnerable to rogue attacks, whereas shutting them down completely immediately eliminates this threat. As such, organisations should always encourage a complete switch off at the end of each day.

As the value of data continues to soar throughout the financial industry, the need to effectively protect it has never been greater. In recent years, many organisations have invested significant sums in robust on-premise data security solutions, only to see the seismic shift to home working render them redundant. However, all is not lost. By taking the time to educate employees on the importance of data security and having them adhere to the tips above, organisations can be confident that their data remains safe during this unprecedented time.

 

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FINANCIAL MARKETS IN 2022: INFLATION, ENERGY PRICES, AND THE CONTRASTING PERFORMANCE OF STOCKS

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Bob Jenkins, Head of Research, Refinitiv Lipper

 

Anyone hoping for a reprieve from the chaos and uncertainty of the last couple of years is likely to be disappointed. The pandemic will continue to have an impact on global economies, both directly (such as ongoing lockdowns and restrictions to combat the disease) and the exhaust effects we’ve seen in areas such as the production of goods, supply chain challenges, labour shortages and rising energy prices.

At the same time, the digital disruption of the financial world continues apace, with assets once overhyped becoming increasingly mainstream.

To make specific predictions in such an environment might seem like a fool’s errand, yet it is possible to discern some themes that will shape the course of financial markets in the coming year.

 

  1. Global inflation gets stubborn: Inflation is not transitory, and we are seeing a foundation for higher prices being put in place thanks to the supply chain and labour issues previously mentioned. In major developed markets, I think we’ll see stubborn inflation regardless of whether Covid remains a pandemic or begins to enter an endemic phase. The situation is slightly more positive in the US; while inflation will remain at a 3.5-4.5% range, a reduction in supply chain bottlenecks, increasing labour force and improved unemployment rates will serve to reduce the impact of primary inflation forces. We should bear in mind that households are estimated to have around $2 trillion in savings, which will maintain consumption levels and keep up the pressure on labour and supply chains.
  2. Rates will rise: Rates are likely to rise, with discussions in several major economies indicating a tapered end to the period of low rates we’ve seen since the 2008 financial crisis. This will probably be achieved in fits and starts as central banks navigate virus outbreaks and any resulting economic shocks. For instance, both the Fed and the Bank of England have indicated there will be hikes, but it is likely that they will rely on tapering at first to slow stimulus while also trying to navigate sentiment swings and volatility arising from waves of infections and/or new variants.
  3. China to lead economic growth, but not by much: China’s growth is likely to be around the 4-5% mark, with the US just slightly behind at 3.5-4%, off its 6% pace from the first part of 2021. The European Union and United Kingdom will likely trail the US, even if they have been exhibiting similar economic issues, while emerging markets could be hit by a combination of the Fed tightening up and challenges dealing with Omicron and other COVID waves.
  4. Higher energy prices are here to stay: Multiple forces will provide support to higher energy prices: supply chain issues, political posturing, demand for heating/cooling due to climate change, but Covid will occasionally step in to disrupt and counteract these forces. Even carbon neutral efforts could cause overall energy prices to rise in the near term as energy producers shift to renewables, with many of these alternative sources remaining expensive. Oil will stay in the $70-$80 range, with the occasional dip towards $60 as intermittent Covid concerns influence energy consumption in the travel sector.
  5. Underperforming stocks with a positive finish: In general, slower growth and lower rates help Growth and Tech stocks while faster growth and higher rates benefit Value and Cyclicals and I believe the economy will tend to lean towards the latter scenario. That said, growth and value leadership will change hands throughout the course of the year as the economy reacts to Covid waves and switches between lockdown and reopening. I suspect Value and Cyclicals will outperform Growth and Tech at the margin, but the dominate capitalization size of the latter two will pull down overall stock market returns. Of course, as with consumers, there is a lot of money being held back at the moment. Businesses have significant cash reserves and self-directed traders continue to shovel money into markets, which, when combined, can help buoy stocks.
  6. Flattening the bond yield curve: I think we will see some retrenchment as a result of rising rate programs by central banks that will largely result in negative to flat returns across core fixed income. Any selling in longer term bonds in reaction to either economic or central bank activity will be mostly offset by buying due to the global desire for yield, thus keeping a lid on longer term rates. Rising short term rates in this environment will serve to flatten the yield curve. High yield bonds could provide for pockets of opportunity as they are potentially tied to cyclical areas of the economy that could show leadership.
  7. The contrasting futures of ESG and digital assets: In the coming year I think we’ll see digital and tokenized assets become almost as popular as Environmental, Social and Governance (ESG). However, whereas ESG is a permanent shift that will eventually encompass the evaluation of all mutual funds, digital currencies still look a little more niche. We could well see them proliferate over the next few years, potentially even becoming a new quasi-asset class, but they will remain a satellite allocation in risk tolerant portfolio strategies. They are unlikely to achieve the status of being included in mainstream portfolios such as defined contribution retirement plans where assets can flow in large, consistent amounts – unlike ESGs, which could well reach that point in the coming years.
  8. A more defined ESG: It is looking increasingly likely that ESG funds will begin to splinter into more thematic offerings as investors eschew the combined “ESG” mandates in favour of more targeted strategies that enable them to better assess stocks aligned with fund objectives. This will also help avoid those securities jumping on the ESG bandwagon.
  9. The continued rise of the Big Five: Of course, in an era of unpredictability, there are always going to be trends or themes that run counter to accepted wisdom. Despite the aforementioned attempts of central banks to raise rates, the Big Five stocks (Microsoft, Alphabet, Apple, Amazon and Nvidia) will continue to show leaderships. While technically falling into the camp of richly valued Growth, these stocks have begun to also acquire a status as a safe haven, with generally strong earnings demonstrating a consistency and dependability that attracts investors. They also populate immense amounts of passive and retirement plan assets under management, equating to steady flows into them in almost any economic environment.

 

All this plays out against a backdrop of our changing stance on COVID. While there are some commonalities in how different regions tackle the pandemic, the continued uneven nature of our global responses makes it hard to determine what state we will be in this time next year. If most major economies can move to an endemic setting, then we should have the tools in place to make ‘living with Covid’ a reality. However, the continued emergence of other variants will cause volatility, and with it a predictable jostling of market leadership. Perhaps the only predictions anyone can truly make is that life will continue to be unpredictable for some time to come.

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FINTECH TRENDS TO LOOK OUT FOR IN 2022 WHICH WILL CHANGE THE WAY WE DEAL WITH FINANCE!

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  • Embedded Finance is estimated to be a $3.6 trillion market opportunity (Matt Harris, Bain Capital Ventures)

Embedded Finance means it’s embedded in an existing ecosystem, it complements the customer experience already there with i.e. ‘one click finance/insurance, it’s the dashboard, app or POS where your customers already interacts.

To put this opportunity in perspective, it is larger than the mobile, cloud and the internet value creation over the last 25 years! Embedded lending is expected to account for nearly a third of the opportunity and some of this impact we already see today. Think about the embedded payments, you book and pay your taxi, food delivery, groceries delivery or Amazon delivery in one simple click.

Rob Straathof

Klarna is one of the leaders in embedded consumer lending with their Buy Now Pay Later proposition, you purchase your fancy new pattas (Dutch slang for shoes) in 3 instalments from your favourite webshop without having to think about payment or repayment. It’s all automated in one-click from your bank account, whilst Klarna does the KYC, credit and bank account checks in less than a second. Other applications will be the ‘checkout free’ shopping experience that Amazon is pioneering, which will come to the hospitality sector soon. And for SMEs, we will likely see the large market of leasing / hire purchase disrupted by instant financing offers on equipment, that is traditionally still majority done manually through broker networks.

 

  • Revenue Based Finance is celebrating it’s 150 year anniversary, and is making a rapid return to become the standard for Small and Medium Business funding

Yes – you read that correct… the rumours are that Revenue Based Finance dates from the late 1800s where oil wells were funded with this construct. High upfront cost to develop an oil well required creative structuring for repayment through a percentage of their future revenues. Over the years, this construct has been around as the Merchant Cash Advance and is now rapidly becoming main stream for funding fast growing eCommerce merchants to purchase inventory and high ROI marketing so they can double down on growth without diluting themselves with expensive venture capital equity raises.

Liberis has been pioneering Revenue Based Finance since 2007 and funded over $800m in more than 40,000 transactions. Small and Medium size business owners love the construct as it doesn’t dilute their equity, the outstanding amount repayment flexes as a percentage of their daily sales so they don’t ever have to think about making the monthly payments, and pricing is typically a flat fee so throughout the pandemic, Liberis’ impacted customers weren’t hit with increased fees or ballooning interest. That’s truly fair and flexible for the business owners!

 

  • Buy Now Pay Later will become a true challenger to the credit card but regulation is looming

Buy Now Pay Later has been around for many years by banks and store credit, though the embedded finance version of BNPL started off in the late 2000s with players like Klarna, Affirm and Zilch having made the mainstream public embrace the term BNPL and as a result they have shown record breaking equity raises and valuations! This trend is here to stay, it’s easy and fast checkout journey and merchant revenue boosting features mean it’s liked by both sides of the transaction. We will see a rapid advancement in the number of players with banks and credit funds looking to take a slice of those consumer debts, and commercial BNPL startups are likely the trend of early 2022.

But regulators are moving in to review customer impact of BNPL as they fear there are negative consumer impacts especially by young adults who don’t realise you have to repay this over time (!) and get themselves into trouble due to the easy availability of credit and BNPL players not having to report their debts to the credit agencies. My view is that the UK, US and other regulators in Europe will look to regulate BNPL similar to other consumer credit with stringent affordability checks, credit limits, credit agency reporting and regulated debt collections. In Sweden the regulator has already moved in, and in the UK the FCA is reviewing the sector. And as they showed with High Cost Short Term Lending and Guarantor loans, the FCA moves in quickly and with no mercy if players aren’t having the customers’ best interest at heart.

By no means will this imply that BNPL is just a fad which will disappear in the next years. It will grow rapidly because of consumer preference, ease of use and rapid online adoption. Though over time, the regulators will imply the same framework on BNPL as it has done on credit cards and personal loans. This means BNPL players will have to conduct appropriate affordability checks, and regulators will ensure sufficient consumer protection which will likely reduce the amount of BNPL players in the market. And reporting outstanding balances on peoples credit files will help reduce consumer over-indebtedness or long term indebtedness if people lose track of the many different credit solutions they’re using.

 

  • One Click anything will become the defacto way of interaction for all embedded finance

I’m probably not the only one who facepalms when I have to fill in all my details for the 3rd time when buying something online or when applying for insurance/cards/loans/online payments etc. With the pre-population features by Google Chrome / Apple Safari / Edge, online payments and address details are made much simpler, but what really makes it stand out is the experience by i.e. Amazon Payments, Shopify and Paypal Checkout on websites. Though you still have to log in with your email and password (or face scan for Apple).

In 2022, many fintechs and hopefully several banks as well will roll out one click checkout for their products, including one-click finance, one-click insurance and for existing Liberis business customers, one-click funding that will hit your bank account in as little as 5 minutes. So Small Business owners don’t have to wait weeks for finance to buy that bargain discounted inventory, pay for goods that won’t be delivered until 3 months from now, or launch a great marketing campaign!

 

  • Will Crypto lending become mainstream?

Crypto is here to stay, even the ‘never crypto’ crowds can’t deny that blockchain and crypto will become mainstream over the next 10 years, crypto is here to stay in one way or another for both the Decentralized Finance (DeFI) world as well as in traditional finance. This can be money transfer, financial exchanges, insurance, healthtech, identity, lending, etc. What it’s really great at, is reducing the ‘cost of trust’ between 2 or more parties. Over the past year, we’ve seen many companies who have launched ‘lending’ features for crypto to allow for speculation on crypto and mostly hedge funds to borrow crypto through middlemen, which allows high interest rates to be paid to retail crypto investors.

So far, the SEC has shut down several of these programs such as Coinbase’s Lend program, and deems them ‘securities’. There is a huge appetite for higher interest rates, especially in the light of high inflation, and savvy adopters of crypto will look to monetise their considerable crypto deposits. It’s a high risk, potentially high return strategy though if there is one key learning from the pandemic and the enormous amount of ‘free money’ pumped into the economies, is that consumer demand will drive rapid innovation and the FinTech platforms will find a regulated way to offer crypto lending products to stay ahead of the competition.

 

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