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Wealth Management

NEGOTIATING DIGITAL TRANSFORMATION IN THE TRADING ENVIRONMENT

Denis Waechter, Sales Manager, IPC

We are currently in the midst of the digital trading era. Software-as-a-Service (SaaS) and cloud technologies are revolutionising the trading landscape and enabling the development of advanced practices that are closer aligned with the objectives of traders and investors.

Increased transparency, greater efficiency, and faster transactions are just some of the benefits that market participants are seeing when embracing digital disruption. The shift to digital has the capacity to transform how trading services are delivered, thus changing the traditional trading model as we have known it. As a result, we are increasingly seeing banks, regulators, fintechs, SWIFT and various companies come together to discuss how to realise the potential that digital transformation offers.

Indeed, digitalisation brings opportunities, and it’s important to know how to seize these opportunities in a way that will benefit your business. All too often, people stick to what they know, but by doing this, miss out on significant prospects and potential deals.

As the trading environment continues to evolve, it’s useful to consider the following steps as a means to optimise the manner in which innovation projects are managed through the adoption of a more global approach:

  • Strategy – develop a common vision

    A project is a bit like going on a family holiday – to get everyone to agree, you have to, along with everyone involved, have a clear objective that is simple and easily understood by all. In trading firms, the ideal would be to “adhere” your vision to that of your company or department.
  • Advantages – what would you like to gain?

Your advantages may be many: financial, of course, but also functional, organisational, competitive and operational. It’s important that advantages are explained and understood in a manner that is clear and measurable. These advantages make up an important part of the “sales argument” and allow a validation of choices.

  • People – make your “clients” your main concern

Identify the various stakeholders from the very beginning of your project. They will be your most valuable allies over the different stages of your transformation. Using the holiday analogy once more, depending on whether you travel with your children, your friends or as a couple, your target audience will be different. Adopt a communication method that is adapted to each of the stakeholders; they will not all have the same expectations. Adjusting your approach and tools to ensure everyone is on the same page will significantly help keep the project on track.

  • Process – how can it be achieved?

Digital transformation projects bring a number of new opportunities and advancements, but it’s important to ask questions about how this process will happen. For example, how has trading evolved? What tasks can be optimised or even automated?

  • Applications – recognise which applications will be affected

While new digital tools can enrich the trader’s working environment, it’s important to know the functionalities required to obtain objectives. The ability to understand the applications that will be needed and how they differ from the current solution is crucial.

  • Infrastructures – what skills are needed to manage the new infrastructure?

Between virtualisation, dedicated servers and cloud hosting, there are an array of choices when it comes to infrastructures and sales models. In an industry that’s as specific as trading, it’s important to ascertain the lifecycle of the solution and the skills required to run the infrastructure and software.

  • Networks – understand how the network will be impacted           

Networks are, unsurprisingly, key components of trading, since they support each step of the lifecycle of a transaction. They are literally the backbone of the information system. Understanding which networks will be relied on, what their specific features are, and the best ‘mode of transport’ across the network is key.

  • Services – clearly explain what users will obtain

Explaining a digital transformation project in the form of a service will be particularly useful, especially if the Information Technology Infrastructure Library (ITIL) approach has been adopted in a bid to integrate it into a catalogue consistent with the rest of the company.

Ultimately, in an environment as dynamic as that of trading where, paradoxically, the requirements for flexibility, innovation, and speed have to coexist with the need to respond to evolving and increasing restrictive regulatory requirements, it is imperative that users are involved in the digitalisation process. Companies that do this from the offset will have a much higher success rate of being at the forefront of their industry than those that don’t. Without doubt, technology remains in the service of humanity, not the other way around.

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Wealth Management

HOW WILL COVID-19 IMPACT ESG INVESTING LONG-TERM?

By Kerstin Engler, Senior Wealth Manager, Geneva Management Group. 

 

Sustainability is a trend on the rise in every sector of the business world. From consumers to corporates, there has been a global shift bringing environmental and social consciousness to the fore.

The investment world is no exception. In recent years, there has been a rise in investors looking to the future ‒ opting to choose their investments on the basis of social and environmental impact rather than exclusively financial gain.

This is not just about making money back on an investment, but about making a bigger impact on the planet and building communities by investing in businesses that implement measures to ensure ethical practice, sustainability and accountability.

Statistics indicate that investors continue to put their money into businesses with a strong focus on environmental, social, and governance investing (ESG), even at the start of the year as the Covid-19 pandemic was already unfolding.

According to investment research company Morningstar, investors around the world put a total of $45.6 billion into funds focused on ESG in the first quarter of 2020. This is not to say that this sector was immune to global investment outflows experienced in response to the outbreak of Covid-19.

After reaching an all-time high of $960 billion at the end of 2019, following three years of consistent growth, sustainable funds declined by 12% in the first quarter. Comparatively, investment funds overall declined by 18%.

But what does the future hold for this investment sector beyond Covid-19? The reality is that it is simply too soon to tell. We have no evidence so far that companies which apply ESG criteria will weather this storm better.

In fact, it’s too early to know what the overall impact on investing will look like long-term beyond Covid-19. Globally, we are still collectively figuring out the ‘new normal’ during this unprecedented crisis.

We have seen that investors are typically focusing on the short-term, dealing with their current investments and focusing on the survival of their companies or their bankable assets.

Our clients want to know how the pandemic will change the world from an investment perspective. We have discussions with clients about how the corporate landscape, and therefore investment opportunities, will be affected. There is a lot of consideration of the impact on sectors including biotech, robotics, gaming and the automotive industry. Consider, for example, that the latter will be affected by a significant reduction in the use of public transportation.

People aren’t asking about ESG. There hasn’t yet been time to look to the long-term. During this period of uncertainty, there have been ripples of talk around the world about how nature will ‘take back cities’ and conspiracy theories that ‘planet Earth is teaching us a lesson’.

Perhaps one good thing that will come out of this is that we will emerge with more consciousness and more purpose. The world will certainly be less global and more local after the crisis. Covid-19 has shown the limitations of globalisation, disruption in supply chains, and transportation, for example.

One of the potential advantages for companies that are already ESG classified is that they may already produce locally for environmental reasons, which could give an edge in this new world where we realise the fragility of global imports and the importance of supporting local business. Other companies may still need to adapt their supply chain.

We have already seen businesses launching new initiatives to help those in need during this time. Beyond Covid-19, it stands to reason that there will be heightened social awareness. More than ever, people are thinking about social factors and uplifting communities. Sustainability could well be in focus as the world collectively heals and looks to the long-term for the planet and its people.

 

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Wealth Management

KEEPING DATA IN THE VAULT: INSIDER BREACH RISK IN FINANCIAL SERVICES

by Tony Pepper, CEO. Egress

 

Financial services organisations are trusted with far more than just money; they are also responsible for keeping customers’ highly sensitive personal and financial data under lock and key. We’re hyper-aware that the growing value of this data means financial organisations are prime targets for malicious cyberattacks – but this isn’t the only threat they face. In fact, not a day passes without these firms’ own employees putting data at risk from within.

You might think that, when it comes to reducing overall breach risk, employees represent low-hanging fruit – surely it is easier to control the actions of a company’s own team members than it is to defend against external attackers? However, this not the reality experienced by financial firms worldwide. While external attackers are always motivated by malicious intent, the employee population is far more heterogenous and, in a sense, much more human. This makes understanding and mitigating insider risk a more nuanced exercise. Just because it is difficult, however, doesn’t mean it is impossible. It’s crucial that financial services companies shift the dial on insider risk and reduce breach frequency, because the penalties for failing to do so are becoming increasingly draconian and the repercussions from customers much more severe.

The recent Egress Insider Breach Survey aimed to understand the different attitudes towards data sharing and ownership among employees in financial services companies and the approaches that IT leaders in the sector are taking to managing insider breach risk.

We found a whole range of diverse profiles of people who put sensitive financial data at risk for very different, but very human, reasons. Some need monitoring to keep their less-than-honest traits from getting the better of them, while others need a helping hand to save them from making genuine, well-meaning mistakes. And across all respondents, we also found confusion over who really owns data, contributing to the more cavalier attitudes displayed by some.

 

Deliberate “data breachers” – from well-intentioned but reckless to disaffected and destructive

Our study found that the financial services sector has more than its fair share of deliberate “data breachers”. Of the thousand employees we questioned, almost a third (32%) said they or a colleague had intentionally broken company policy when sharing or removing information in the past year. This compares with just 15% of healthcare workers and 11% of government sector employees.

The reasons given for this deliberate flouting of security policy varied. One-third said they were simply trying to get their job done but didn’t have the appropriate tools to share data safely. On the face of it we might have some sympathy with those employees, but would consumers and businesses want to bank with those firms?

It’s more difficult to be sympathetic with those motivated by self-gain, including the 41% who took data with them because they were moving to a new job. And we have even less sympathy for the 15% who compromised data because they were angry with the company and wanted to deliberately cause harm.

 

Operator error – mobile, tired, under pressure

Even with their firm’s best interests at heart, employees still make mistakes. 30% of financial sector workers said they or a colleague had caused an accidental data breach in the past year – again more than twice as many as their public sector counterparts. A third had sent an email to the wrong person and a further third had clicked on a link in a phishing email.

Their reasons behind these breaches varied from the pressure of working in a stressful environment, to tiredness and rushing. A significant proportion, however, said they made an error due to using a mobile device – and given the current requirement for mobile remote working during this COVID-19 pandemic, this is a definite cause for concern.

 

Breach detection gaps and technology limitations

Next, we examined what IT leaders in the sector have in place to mitigate insider breach risk. Concerningly, 60% said the most likely way they would discover an insider data breach was via internal hand-raiser reporting by either the employee themselves or a colleague. Only one third felt that their breach detection systems would pick up the issue.

In a similar vein, traditional data protection technology use was surprisingly inconsistent across financial firms. Email encryption, anti-malware and secure collaboration software were in use by fewer than half of financial sector companies. Again, raising the question whether consumers and businesses would be willing to trust their data to financial firms if they knew they didn’t have systems in place to protect it.

So, why is this the case? From the data we uncovered, it seems as though organisations are resigned to a proportion of insider breach incidents occurring, accepting them as an inevitable result of doing business and employing people. But this doesn’t need to be the case. It is possible to apply human layer security solutions to mitigate these risk factors and make a positive impact on breach frequency figures.

 

Human layer security – a helping hand and a watchful eye

Take the issue of rushing or tiredness. This can lead to users adding the wrong recipients to emails or failing to spot the subtle changes in familiar email addresses that denote targeted phishing attempts. This risk can be overcome with tools that use contextual machine learning to analyse what the good security behaviour looks like for each user and support them with alerts that tell them they’ve added an unusual recipient to an email, or that they are about to answer a phishing email. A small prompt is all these users need to stop them from making an error and causing a data breach.

Similarly, when using mobile devices with smaller screens, it is very easy to choose the wrong attachment and send sensitive data outside the organisation to the wrong recipient or to the right person unprotected. If an employee is less than honest, our always-on, constantly connected culture also enables them to deliberately do so too. However, it is possible to stop these incidents with an intelligent solution that scans email and attachment content and identifies data such as personally identifiable information (PII) or bank account details to alert users that they are about to send information to an unauthorised recipient, or without the correct level of encryption applied. If the user persists, the risky email can be blocked from being sent and administrators alerted to a potentially intentional attempt to breach data, so they can respond accordingly.

Ultimately, the most effective way to address human-activated threats to security is by implementing tools that support and manage users when they are at their most humanly vulnerable; tired, rushing, under pressure, angry or self-interested. As our research and wider evidence shows, the financial services sector is more than averagely vulnerable to insider data breaches, meaning human layer security must be a priority for IT leaders in the field if they hope to reduce breach frequency and keep sensitive data firmly in the vault.

 

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