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HOW FINANCIAL INSTITUTIONS CAN MINIMISE THE RISK OF IT OUTAGES

Paul Mercina, Director of Product Management, Park Place Technologies.

The cost and impact of IT system downtime has never been greater due to businesses’ increasing dependence on IT systems and infrastructure across all areas of their operations. Any system outage can have catastrophic impact on an organisation in terms of costs, lost trade and reputation. Gartner estimates the average cost of network downtime at a staggering $5,600 per minute. This figure is even more startling when you consider that British businesses are reported to suffer at least three days of downtime per year.

Consumer trust

Paul Mercina,

Downtime is a major problem for any industry but is particularly damaging for the finance sector where consumer trust is paramount. Many high street banks have made the headlines in the last year after suffering system outages breaching customers’ data and affecting their access to accounts. Beyond these high profile cases, the true scale of the problem is evidenced by a report from Which? Money revealing that, between 1 April and 31 December 2018, there were 302 reports of IT systems failure affecting customer transactions – equivalent to an incident each day. Which? Money said that six of the major banks had suffered at least one incident apiece every two weeks.


Banks are, therefore, under increasing from politicians and regulators to improve their response to IT problems. In November last year the Financial Conduct Authority said it was “deeply concerned” after finding that technology outages had more than doubled over the preceding 12 months, while the Treasury Select Committee launched an inquiry into the issue. The Bank of England has also threatened banks with higher capital charges if they do not do enough to deal with technical problems.

Human error main cause

There is a common misconception that IT outages are an unavoidable part of business operations; however, a large percentage of all downtime is not related to a failure in the technology itself but to how that technology is being used, configured and administered. The failure is usually down to a combination of a lack of training and planning.

So how can financial organisations minimise the risk of IT failure causing them to become the next unwanted headline?

Prevention is better than cure

The best way to avoid losing revenue, reputation and customers is to prevent outages, especially the type of routine failures that can’t be blamed on a major disaster. Adopting best practice processes – such as running regular threat and vulnerability assessments, conducting configuration reviews and including operation process validation checkpoints – can significantly reduce your chances of suffering from a systems failure.

Testing imperative

Testing of different systems requires time and resources that can sometimes be difficult to justify. However, it’s important to remember that thorough, targeted real-life testing can reveal incompatibilities, glitches and capacity issues unforeseen at planning stages.  It was reported that one of the key causes of the Lloyds Banking Group outage which left customers unable to access their online banking services was the result of various systems not being as thoroughly tested as they should have been when accounts were migrated to the Group’s new core banking platform.

Staff engagement and training

According to report by the Ponemon Institute, human error is the second most common cause for system failure – accounting for 22% of all incidents. Employees must be regularly trained on how to avoid an outage as well as how to mitigate the damage and impact should one occur.  Within financial organisations staff will be using a myriad of complex systems and technologies and it’s important to remember these technologies are only ever as good as the people using them. Clear, precise and regular usage guidance is imperative to minimise the chances of human error.

Remain vigilant at all times

Vigilance should be an essential part of any financial organisation’s IT strategy. Organisations should be working with an IT managed service provider to ensure that they are always following up to date best practice guidelines and pro-actively questioning their IT set-up and the associated risks.

Well-rehearsed recovery plan

Although an IT outage is sometimes unavoidable, prolonged downtime does not have to be. Having a well-rehearsed business continuity plan in place can help to mitigate the impact of any system failures.

Any business continuity plan needs an executive owner/sponsor who has the experience and authority to get things done in a timely and processed manner.  All action plans should be regularly reviewed at board level and shared with all stakeholders across the organisation so that all the risks and organisational implications are planned for to avoid its implementation being hampered by budget or knowledge constraints.

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Finance

2020: THE YEAR OPERATIONAL RESILIENCE AND CYBER-RISK TAKE CENTRE STAGE IN FINANCIAL SERVICES

Miles Tappin, VP of EMEA for ThreatConnect, explores how financial providers can build a cyber security strategy that enables operational resilience

 

Financial institutions are operating in a new digital landscape. New disruptive technologies – from Artificial intelligence (AI) to crypto-currencies and big data – have driven change and innovation. In retail banking, new fintech providers have seized the opportunity to offer personalised services and challenge existing providers. For example, Klarna, has successfully disrupted the payments sector and is now established as Europe’s biggest fintech firm. It has quickly emerged as an alternative to credit cards since bursting onto scene, allowing consumers to shop now and pay later with retailers, such as H&M, Ikea and Zara.

To compete with the rising number of fintech providers and fulfil growing consumer expectations, traditional financial institutions are developing robust digital ecosystems that can deliver omnichannel service models. However, it’s becoming clear that the pace of technological change is a double-edged sword. It enables innovation and change but it is also one of the most destructive forces in the financial services ecosystem today.

 

Financial services emerge as a hotbed for cybercriminals

2020 has emerged as a defining year for cybersecurity in the financial services industry. It started with an unprecedented attack against Travelex where hackers successfully took some of the currency providers offline for nearly a month. Then came Coronavirus which sparked a new wave of malware and phishing threats. Research from VMware Carbon Black Cloud revealed that threats against financial institutions have surged by 238% since the start of the pandemic.

The renewed interest from cyber criminals comes at a time when regulators are paying close attention to the resilience of the sector. After a string of IT failures and breaches, financial organisations in the UK have been given a mandate from regulators to improve operational resilience. This means ensuring business models can withstand disruptive events from hackers or adversaries and quickly recover to protect the stability of financial systems.

In December 2019, the UK’s financial regulators published a series of consultation papers outlining their proposed approach to achieving greater operational resilience. The proposals suggested that financial institutions will be required to map out the systems and processes that support business services in order to identify any potential vulnerabilities that would pose a risk to the stability of the UK financial system or the firm’s standing.

 

A mandate for change

Where cybersecurity used to be a classic back-office concern, it’s now a central part of digital strategies and a key pillar of both reputation and customer retention – financial legislation leaves no room for failure. All financial institutions need to ensure they have full visibility of their systems and can detect any potential threats.

The challenge for financial institutions is making the security tools they have purchased separately work together in tandem. Security teams buy a firewall, an email filter, threat intelligence feeds, antivirus software or enhanced endpoint protection, and whatever else they need individually. Each of them does a good job but they don’t talk to each other and valuable time is lost tending to individual systems that become a burden to run. At the same time, running multiple security systems is expensive. The more systems you have, the more highly skilled staff you need to manage them, and they’re few and far between.

 

Improving intelligence sharing across borders and communities

To reduce complexity and simplify decision making, financial organisations need to unify processes and technology to harness the security intelligence that comes from across their own security programmes and external sources to drive down risk. However, no financial institution can tackle the problem alone. Experienced threat actors using advanced techniques are constantly targeting the financial sector. The industry needs to come together as a whole to foster a sense of collaboration and data sharing.

In the same way that financial institutions have introduced open banking to deliver a fairer service to customers, the same needs to apply to security – all parts of the financial ecosystem need to unite and share information to learn from one another and succeed in the fight against adversaries that operate across borders.

By sharing alerts on cyber hazards and risk across financial institutions and with law enforcement, government agencies and other relevant authorities, it’s possible to build industry specific insights into cyber security threats and quickly pivot to gain more information on those specific threats and threat actors. By working together, a picture can be painted on threats coming from all manner of malicious activity, from malware to ransomware, to phishing and software vulnerabilities.

 

Breaking down barriers

Having the right intelligence is not enough to ensure that intelligence is turned into action. Breaking down information and process silos across security teams allows financial organisation to analyse and act on the most pertinent information. Everyone has access to the risk and threats that matter most, and orchestration and automation of response helps overwhelmed security teams prioritise response plans and improve efficiencies in their security programme.

Integrating internal security tools and technologies, while also connecting to external sources of intelligence, creates a single source of intelligence that feeds operations and enables organisations to direct action against the threats that matter most. The outcomes of those actions further feed intelligence, providing the ability to further refine the efficacy of the entire security lifecycle.

This approach provides a continuous feedback loop for the people, processes and technologies that make up the security programme. It allows financial institutions to keep up with threat actors that have consistently adapted their methods to profit at the expense of the financial industry. Something that won’t stop anytime soon.

 

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Finance

GROWTH OF FINANCIAL MARKETS AND TECHNOLOGY

Ashish Jain,CEO, Future FX

 

The economic development of any nation completely depends on its financial structure both in long term and short term. The financial system and its efficiency determines the success of the nation in terms of economic growth.

As most of the sectors are taking advantages of the technology evolved since 1980, financial sector has also transformed immensely.

The Bombay Stock Exchange (BSE), dating back to 1875, started as a broker’s forum under a tree on Dalal Street, and is Asia’s oldest stock exchange. For over a century, registered brokers have made trades happen.

The National Stock Exchange (NSE) came up in 1994 to provide screen-based electronic trading. It gave fibre-optic access to brokers in other cities who could join the trading in the centralized exchange located in Mumbai.

Dematerialization of shares started in the late 1990s and online trading began at the turn of the millennium where investors could buy and sell shares through electronic brokers such as ICICI Direct and Sharekhan.

As more and more elements of the stock market get digitized, it increases its potential to attract a new generation of investors.

Online financial services company Zerodha brought “discount broking” to India in 2010, applying a flat fee of ₹20 on a trade whatever its size. This attracted young investors who could do a trade in less commission. Now, we have all the marketing and trading apps on our phones and we can easily make trades.

The insurance sector has eliminates the role of broker and now anyone can buy insurance through mobile phones. Some such apps are HDFC ERGO insurance, Insure, Caringly Yours, etc.

Trade has always been shaped by technology but the rapid development of digital technologies in recent times has the potential to transform international trade profoundly in the years to come.

From the moment we wake up to check how the markets performed overnight until the time we go back to bed before doing another check of how the market is set to open on the other side of the globe, technology now plays a critical role in everything we do and the way we do things.

For the financial markets, the coming of advanced technology has been the key factor behind the transformation in the way things are done. Technology is also at the core of how companies operate and maintain their competitive edge in this vicious environment.

While forex trading and trading in general used to be the domain of institutional and corporate players, today even retail and private investors consider forex an essential component of their overall portfolio. And this is no doubt due to the ease of access and price transparency offered on the electronic platform.

Nowadays, providers need to have the latest technology all the time. They need to add new and build more features to their platform to attract and retain clients.

Traders are now able to monitor their trades from anywhere as long as there is an internet connection. This gives traders more freedom, mobility and flexibility.

The trading in global markets has thus become easy and convenient like never before.

 

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