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Banking

HOW BANKS CAN RESPOND TO NEW CHALLENGES AND PLAN FOR RESILIENCE

James Gannaway, Head of Financial Services & Insurance, Board International

 

The Bank of England (BoE) is postponing its climate stress tests, which have been previously well regarded as a ground-breaking initiative to enable in-depth analysis of the impact of global warming on business models and operations of both banks and insurers.

 

Climate change

The bank’s Prudential Regulation Authority (PRA) and the Financial Policy committee in a statement on priorities in light of the impact of the current global lockdown, has said it will delay the launch of its climate biennial exploratory scenario, which will test the resiliency of the largest financial firms’ business models to the physical and transition risks from climate change, until at least mid-2021.

Central banks worldwide have been increasingly involved in the debate over climate change and the impact on the financial system. The BoE has led the way to date in encouraging banks and insurers, to assess exposures to global warming and new risks which can come with the move towards a low-carbon economy.

So what does this mean for Banks who would have been making boardroom level plans for the impending stress tests?

Firstly, a short postponement of the Bank’s stress tests, is completely understandable, given the realignment of central banks all over the world to refocus financial policies, and double-down on help to try to manage the economic fall out of the current lockdown.

But – secondly, and just as importantly, the climate emergency is not going away, and will return to the top of the BoE’s agenda very soon, meaning vital plans at Banks & Insurers, must continue to be made.

 

New normal

Right now there are many commentators talking about a new normal, McKinsey go one step further frequently referring to a next normal. The climate emergency and the transition to the low carbon economy will feature heavily in boardroom plans as banks plan for what this next normal will look like. Banks can’t afford to detract from planning for the key operational priorities now, as the importance of climate risk to banks and their clients will only continue to grow.

The impact of climate risk and the successful transition to a low carbon economy will be THE next normal for the way in which the global finance industry must be rewired to operate. BoE stress tests will be implemented – and this is going to mean people, processes and technology need to be recalibrated to ensure banks are resilient and can meet new key performance indicators.

The global transition to a low carbon economy, means getting ahead of and planning for a moment in time, which will be crucial to how banks and insurers operate successfully in the future. The ability to plan for today’s challenges – and have one eye on what is coming down the road, means board level leadership teams at Banks needs to be all over the key data and metrics which will define future success.

The ability to pivot operations, plans, forecasts and teams in response to new stress test metrics will dictate the finance industry leaders who will thrive in the future and demonstrate real leadership.

 

Digital Boardrooms

A move to Digital Boardrooms will drive this new operational mindset. CXO leaders at forward-thinking banks will want the latest data driven metrics in front of them in real time, so they can see and report back on how their Bank is progressing on the road to a transitioning and complying with new low carbon economy KPIs.

Executive leaders across the financial services industry will expect to be able to respond to the changing business agenda, by accelerating their most important decision-making through genuine digital transformation.

Take, for example, a board meeting where a bank’s business strategy is being discussed and which direction the bank should take to respond to new legislation relating to the new low carbon economy. With multiple routes available, how should a decision be made? A digital boardroom will provide the answer.

Such a decision-making platform allows anyone in the room to perform complex scenario modelling and build strategic plans as they go and discuss potential outcomes with data. A bank or insurer considering the development of a new way of working to comply with new stress tests focused on their resilience, needs to answer a number of questions before moving forward – what and where are the resources needed to step-up? Will the new transition require investment in people? Would it be more economical to hire additional staff, upskill existing employees or outsource certain aspects completely? What is the impact from other potential shifts in the economy in future?

Today’s turbulent environment means executive leaders at finance organisations must be able to plan, adapt and react with speed. Data silos across the organisation must be broken down, to gain a holistic view of banks’ performance in line with the BoE’s new stress tests. Connecting banks’ operational planning activities, joining-up functional transparency, and enabling the accurate simulation and testing of scenarios in Digital Boardrooms has never been greater in order to comply with the new stress tests that we know will arrive in the near future soon.

Banking

IMPROVING THE BANKING EXPERIENCE THROUGH INFORMATIVE AND ENGAGING VISUAL COMMUNICATIONS

Javier Lopez, General Manager Vertical Solutions, OKI Europe Ltd

 

Banks play an integral role in daily life. However, everyday opportunities such as attracting new customers into branches to open an account, or promoting new offers and services to existing customers, can be lengthy, expensive and cumbersome processes – especially when tailoring communications to the specific requirements of each branch, or differing customer needs.

Quickly creating and adapting in-branch visual communications to communicate and educate cost effectively while remaining on brand can be a challenge, especially for banks that have networks of branches and print their visual communications centrally or use third-party suppliers.

 

Building trust through signage

Visual communications can help build trust and satisfaction between you and your customers.  The ability to create and print personalised communications on demand can not only instil confidence in your brand, it can also offer the flexibility to quickly adapt to financial trends and fluctuations in interest rates. This is particularly important in today’s volatile market, so that you can keep your customers informed while remaining competitive.

Javier Lopez

Printing in-branch and on-demand is an immediate and cost-effective way for banks to communicate with customers. With the right printer on-site, branch staff can easily create and print signage and customer communications as well as everyday documentation to a professional quality as and when needed. This saves on the cost of third-party suppliers and eliminates lead times for essential signage.

The ability to print a comprehensive range of collaterals in-house including freestanding and hanging banners, posters, self-adhesive floor and window stickers, as well as personalised leaflets and direct mailers, can help keep customers informed about the latest services and offers. It can also be used to remind both customers and staff to adhere to social distancing guidelines. Furthermore, the same printer can be used for day-to-day documents such as personalised mortgage or loan offers.

 

A message that sticks

As the world adjusts to a new normality, OKI Europe Ltd recognises the challenges banks face when encouraging social distancing and has teamed up with Floralabels to offer free* social distancing media and artwork to create self-adhesive floor stickers that can be printed quickly and easily from an A3 colour printer such as the C800 Series.  Floor stickers can help ensure customers maintain safe distances while queuing at counters, kiosks and ATMs. The free stickers include self-adhesive floor circles (285 x 285mm) and rectangular floor banners in two sizes (215 x 900mm and 297 x 1,320 mm) with various designs and messaging options to choose from.

 

Achieving ROI with a do-it-all device

When it comes to printing in-branch, implementing a printer with unrivalled media flexibility will provide the best return-on-investment. Not only will the bank be saving on printing and delivery time and costs, it will also save on storage space or potential wastage as well as offering the flexibility to be more reactive to market trends in a timely manner.

OKI’s multi award-winning C800 Series A3 colour printer is designed to take up a minimal footprint and will supply everything from 1.3m metre hanging and freestanding banners to posters, self-adhesive floor stickers, window stickers, leaflets, flyers and much more on a diverse range of materials. Featuring OKI’s pioneering digital LED technology, the C800 Series delivers professional quality results, at high speed and on-demand.

Banks are vital to helping people and businesses prosper, supporting economic growth. Investing in cost-effective do-it-all devices that enable the fast rollout of eye-catching, professional quality collateral will help banks and their customers thrive.

 

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Banking

CONSEQUENCES & RISK EXPOSURE FOR NON-COMPLIANCE WITH PCI DSS FOR THE BANKING SECTOR

Narendra Sahoo,Founder and Director of  VISTA InfoSec

 

Introduction

Every day millions of people around the globe fall prey to cybercrimes. What makes it alarming is that majority of the data breach/theft is related to debit and credit cards. For these reasons, the PCI DSS standards were set in 2006 to strengthen information security and secure cardholder data. PCI DSS is a compliance requirement for all organizations and financial institutions including banks that deal with card transactions. As per the set guidelines, banks and other financial institutes are expected to have in place comprehensive internal controls, and security frameworks to safeguard sensitive data. Financial institutions heavily deal with millions of transactions daily, which is why it is an incredibly challenging task for them to secure transactions and cardholder data. For the amount of risk they are exposed to, the financial institutes are the most heavily regulated industry in the U.S. and around the world.

In this article today we have discussed how PCI DSS Impacts the banking sector and the risks they are exposed to for non-compliance.

PCI DSS Compliance in a Glance

Payment Card Industry Data Security Standard is the set of security standards administered by the PCI Security Standards Council and established by the top 5 credit card brands namely the American Express, Discover Financial Services, JCB International, MasterCard Worldwide, and Visa Inc. The Compliance Standard applies to –

  • Any organization or institute that deals (store, process, transmit) with credit cards including service providers.
  • Any organisation (service provider) whose functioning can affect the security of the Card Data Environment of another organization (Client of service provider)

The scope of compliance typically covers data security, security framework policies and procedures, network architecture, and software design. Financial institutions, including issuing banks, (banks that offer credit cards to customers) and acquiring banks (financial institutions that hold merchants’ bank accounts, receive payments through the card processors, and deposit funds on behalf of the merchants), merchants, and service providers who process, store, transact, or enter into a contract with the five-card brands are expected to be PCI DSS Compliant.

Impact of PCI DSS Standard on the Banking Sector

PCI DSS is a set of security standards that banks need to follow diligently to stay compliant. For millions of transactions that they undertake daily and the risk to which they are exposed, requires them to have in place strong security measures to safeguard Cardholder data. Given below are some PCI DSS Standard Requirements that banks are expected to follow and security tests they need to perform to ensure no compromise of the cardholder data environment.

  • Test the defense systems in place to ensure network, end-point, and web applications are secure.
  • Frequently commissioning a controlled data breach attempt against the bank network to secure networks (Penetration Testing or even a Red Team assessment).
  • Perform security tests to detect known vulnerabilities like SQL injection, OS command injection, Cross-site scripting, broken authentication, etc.
  • Test networks and check for the presence of authorized and unauthorized wireless access points every quarter.
  • Perform Penetration Test on the cardholder environment (CDE) and systems and networks connected to it at least once a year or after a signification change has been made to the application.
  • Conduct a VAPT test to identify all possible threats and exploit them to penetrate the system at the application and network level.
  • Issues identified should be corrected and re-tested until the time systems and networks are clean and have strong defense systems in place against malicious activities.
  • Conduct Internal audits as per the PCI DSS requirements atleast once a year or after any major change to processes or systems.
  • Internal awareness training for the employees atleast once a year.

While it extremely challenging to meet the testing requirements of PCI DSS, performing the test and securing systems and networks is mandatory for Banks and other financial institutions. Failure to comply with the bank will have to face severe repercussions in terms of huge penalties, and loss of trust and credibility. We have listed below some serious repercussions and risks banks may be exposed to for non-compliance with PCI DSS.

Consequences and Risk Exposure to Non-Compliance with PCI DSS for Banking Sector

The risk of merchants suffering a data breach has far greater, implications and consequences, resulting in monetary penalties and often, irreparable damage to brand reputation.

Data theft & Security Breach-

Being non-compliant to the PCI DSS Standards simply means the bank may not have the necessary security measures in place to protect data. Having no strong defense systems and security built around the network and systems will lead to a security breach and data theft. This could further have huge financial implications on the institute, leading to huge losses.

Hefty Penalties

Non-compliance to PCI DSS can result in huge penalties ranging from $5,000 to $100,000 per month by the credit card companies. The penalties levied shall depend on the volume of transactions, and the degree of non-compliance. Further, the penalties levied shall be based on the discretion of the payment brand and the brand may decide to levy penalty based on per record that has been breached Moreover, the fines get reassessed monthly and may raise over time until the merchant achieves compliance. However, fines that the bank incurs can be passed to the merchant via high transaction fees or service charges if in case the merchant is found to be non-compliant. This will further strain or affect the relationship between the bank and the company.

 Compensation costs for non-compliance

A huge amount of compensation costs would involve in case of non-compliance to PCI DSS Standards.   The banks or merchants will have to probably compensate the clients with credit card monitoring, identity theft insurance, or in any other form of compensation.

Tarnished Reputation due to non-compliance

Security breaches and data theft shall not just have financial implications but will also cause irreversible damage to the reputation of your brand. Once your security is compromised, it will be very difficult to regain their trust in your bank. The image and reputation of your bank will be at stake and greatly tarnished if found non-compliant and face a security breach.

Revenue loss

Once there is a blot on reputation, it will significantly impact the business revenue and sales. There is a huge possibility of the bank facing loss due to an incident of a breach. Infringement can lead to loss of consumers, followed by loss of revenue. The financial implications are far more significant than the amount of money it would probably take to ensure compliance with PCI DSS.

Direct Intervention of Regulatory Bodies-

Non-compliance to PCI DSS followed by a security breach could call for the direct intervention of Regulatory Bodies and involve frequent Federal Audits. This would further involve imposing strict regulations and penalties. Consequences like this could severely impair the banking business.

 

Conclusion

The bottom line is that no matter how strong your defense is and the number of assessments you conduct, it just needs one slip for the breach to happen. So, no system is totally impenetrable, but at the end of the day, incase of breach, you need to present your bank in a way that it has followed all the compliance requirements and did its best to secure the systems to the best of its knowledge and ability.This is where the banks need to work on by conducting due dellligence as detailed in the standard and summarized above in the article.

Moreover, we belive  complying with the security standards is extremely important not just for the banking business, but also for the safety of their clients. While the standard requirements and testing process may seem to be rigorous, but the consequences of non-compliance can be destructive for the banking business. Banks in general have their take on the set standards. Depending on the risk levels (which are often high in the banking sector) and exposures, banks generally balance between the cost, security, and functionality, while investing in an effective security control framework.

 

Author Bio: Narendra Sahoo (PCI QSA, PCI QPA, CISSP, CISA, and CRISC) is the Founder and Director of VISTA InfoSec, a global Information Security Consulting firm, based in the US, Singapore & India. Mr. Sahoo holds more than 25 years of experience in the IT Industry, with expertise in Information Risk Consulting, Assessment, & Compliance services. VISTA InfoSec specializes in Information Security audit, consulting and certification services which include GDPR, HIPAA, CCPA, NESA, MAS-TRM, PCI DSS Compliance & Audit, PCI PIN, SOC2, PDPA, PDPB to name a few. The company has for years (since 2004) worked with organizations across the globe to address the Regulatory and Information Security challenges in their industry.  VISTA InfoSec has been instrumental in helping top multinational companies achieve compliance and secure their IT infrastructure.

 

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