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THE FINTECH REVOLUTION: BALANCING INNOVATION AND SECURITY

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By Altaz Valani, Director of Insights Research at Security Compass.

At a time of significant disruption for the financial services industry, a sector forecasted to be worth $300bn by 2022, organisations are facing important decisions when it comes to digital transformation.

Among ever growing customer expectations and the need to comply with changes in the regulatory landscape, fintech companies are under increasing pressure to ensure innovation is properly implemented.

Failure to do so comes with a significant cost; that of security breaches and exposure to new vulnerabilities. From AI and biometric authentication to Robotic Process Automation, the growing adoption of technology among the financial services industry is intensifying the volume of customer data at risk.

Internal and external threats

To mange this risk carries both internal and external challenges for fintechs. Internally, the main challenges are centred around cyber skills, knowledge and expertise; externally, coordination with regulation is demanding.

Balancing an ever-increasing appetite for innovation and growth with robust security and risk management processes is absolutely crucial. Cyber threats continue to grow and diversify, and every new digital product and service carries an ever-evolving array of security risks.

Solving the cloud puzzle

Historically, due to the perceived value of the information held, the financial services industry is one of the primary targets for data breaches. This is why many financial services organisations have turned to the cloud as a solution for their IT infrastructure.

However, migrating to the cloud increases the attack surface of applications. That is why the importance of meeting security and compliance requirements cannot be overlooked in the rush for deploying new apps directly in the cloud or developing analytics-as-a-service or automation-as-a-service capabilities.

Strategically aligning digital delivery and security is one of the most complex challenges facing financial service businesses, and so many are turning their attention to Balanced Development Automation (BDA).

BDA: Aligning DevOps with security

To ensure success and competitive edge in the long run, fintechs need to create synergies between their DevOps, security, and business teams. This is where BDA comes in because it aligns DevOps with security, ensuring the latter is “baked” into the software development process. It acts as a guide through every step of software development, ensuring that security checks are built into the process from the beginning, and ultimately enabling DevOps teams to deliver secure products.

Consider it a three-step process:

1) Security should equip the development team with awareness of what is required from a security controls perspective. The same goes for risk and compliance. Developers need to know from the outset what these parameters are and factor them into their work from the get-go.

2) The next stage is examination of security metrics based on existing controls and emerging risks. The result of this might be the creation of new controls, but they have to be developed with an understanding of impact based on cost and business exposure. Ultimately, it is a business decision to determine the right risk threshold.

3) The third and final stage of the BDA process lies with governance at an audit and board level. Metrics collected from the first two stages are rolled into this and KPIs measured at this level are based on core business concerns around compliance, resilience, reputation, cost, and so on.

Balancing innovation with security

Ultimately, the success or failure of the fintechs of today can hinge on how they balance the adoption of new technologies with maintaining the privacy of their customers and the security of their customers’ data. This is a delicate balance, and one which requires action from the very start to identify and address risks.

Building security into applications from the very beginning of the software development lifecycle enables financial services companies to align security, compliance and risk priorities with business needs. This is ultimately a recipe for success.

Finance

TECH TRENDS: THE FUTURE OF FINANCE IS DIGITAL

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Simon Bull, Sales Operations & Business Development Manager, Aqilla

 

Everywhere you look across the modern working environment, there is pressure to ‘digitally transform’ by using technology in areas where manual work and processes have previously been the preferred option. Despite growing momentum in general, progress across the finance function has been somewhat slower than other core areas of business, not least because it is highly regulated and teams must exercise caution to ensure introducing change does not also introduce risk.

One familiar scenario is the approach finance departments take to storing data, particularly any sensitive information, on their own premises and their own hardware. While keeping valuable assets such as this close to hand offers a strong sense of security and control, it illustrates the limitations finance teams face in changing traditional approaches and, as a result, the relatively slow pace of technology-focused innovation overall.

However, the case to embrace tech-led change is becoming irresistible, with businesses everywhere highlighting a huge range of digital transformation benefits, from cost savings and technology performance to IT security and compliance. In the current environment, many finance teams have also experienced first hand the impact of digital transformation, with remote working bringing new technologies and digital services into focus.

Simon Bull

But, where are we heading? As digital transformation gains momentum across the finance function, where should teams be looking for opportunities to update manual processes or to replace outdated technologies? And where might the trends at the heart of this movement – such as cloud computing – have the biggest impact on the day-to-day experience of finance professionals?

The role of cloud computing raises a key point. For finance teams, digital transformation also requires a change of mindset, perhaps best illustrated by a willingness to move away from outdated in-house technology infrastructure and software products to flexible and more financially efficient cloud-based services. In doing so, it becomes possible to focus on opportunities and priorities:

 

Cost savings

One of the most important is the cost of technology. The cloud-based Software-as-a-Service (SaaS) approach that can offer users the convenience of a monthly pay-as-you-go payment model for a range of key technologies, such as accounting software. This is in contrast to traditional IT procurement models where businesses have to invest significant sums in one-off software purchases. What’s more, because SaaS users typically only need access to a laptop and internet connectivity to use cloud-based applications, it also saves money on the server hardware that has previously sat in the corner of the office, and in fact, it may no longer be needed at all. In selecting cloud-based finance software services, organisations should always compare pricing from several providers to make sure they are getting the most competitive deal.

 

Technology Performance

Today’s cloud-based finance software solutions are available with a growing range of options, starting with simple, entry-level functionality to the opposite end of the scale to products offering powerful performance designed to fit the needs of even the biggest and most complex finance departments. Important features and functions to look out for should include: extensive analysis, proper periodic management and business calendars, multi-currency, multilingual and multi-company operation, full VAT handling International coding, tax and language flexibility, automatic reconciliation / bank integration, built-in key performance measurement, advanced search, selection and drill-down, document and image scanning.

 

Stronger security

Many cloud providers now have security at the top of their list of capabilities, but checking their accreditations, policies and security track record should always form part of any selection process. This should include areas such as data protection, backup services and their ability to deal with common security issues, such as ransomware.

 

Service standards

When looking at cloud service providers, finance teams should also focus on the quality of service on offer. At its best, cloud-based customer support and service can deliver an outstanding experience where the provider really feels like an extension of the in-house IT Team. The best way to check on the service capabilities of any cloud provider is to ask for references from existing customers, check online reviews and evaluate their Service Level Agreement (SLA) to understand the small print of any terms and their impact on service levels.

 

Compliance

Compliance is front of mind across the finance function and is an area where the specialisation offered by many cloud software solutions can be of huge benefit. Even for the most niche requirements, there is often a software provider out there who has a solution designed to meet very specific needs, and in embracing these technologies, the efficiency and accuracy benefits can be truly transformational.

The challenges seen across the economy over the past 12 months have significantly accelerated the pace of technology-led change, finance teams included. But, cloud-based finance software services can help teams to widen their approach to innovation, embrace the flexibility offered by remote working on a permanent basis and deliver a range of operational and customer-focused benefits for the long term.

 

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THE INSURANCE SECTOR IS BEING DIGITALLY DISRUPTED: BUT IS IT READY?

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The insurance sector is being disrupted by innovative technologies that are helping to drive digital transformation within the industry. The global Covid-19 pandemic forced the sector to temporarily let go of traditional working models and implement remote working approaches so that employees continued supporting customers while at home.

The move to remote working has encouraged legacy insurance companies to rethink and digitise services to keep up with challenger Insurtech brands. As they continue to pick up pace, traditional insurance businesses are keeping their eyes firmly on the prize, using technology trends such as IT consumerisation, AI and IoT, to spur new creative offerings. But are they ready for a permanent change?

 

Facing up to challenges

While insurers tapped into innovative emerging technology trends to create new services for customers and improve employee experience, there continues to be residual pushback. In a recent risk management study by Deloitte, more than two-thirds of individuals believed the use of emerging technologies, such as big data and analytics, could dramatically increase performance in their organisations. Yet just 29% of organisations are deploying these tools.

To remain agile, the insurance industry will need to find ways to address this gap in 2021. According to Gartner, barriers ‘often have little to do with how different a technology is.’ They stem from low employee utilisation, a lack of visibility into technology investments and regulatory red tape.

 

Improving technology adoption 

A common challenge to adopting emerging technologies is the lack of skill and familiarity in using new tools – not the tool itself. As insurers look to change their working approaches following the pandemic, they should give employees the devices they are most familiar with to remain productive in their new working environments. According to PWC, 78% of millennials believe having access to the technology they like at work makes them more effective. Not only does this save on time but employee-choice programs will also create new benefits such as increased employee engagement, retention and recruitment.

IT consumerisation has enabled the most loved technology providers, such as Apple, to support employees as well as businesses. The influx of Apple’s iPhone, Mac and iPad is directly influencing business productivity as there are now more than 235,000 business apps available in Apple’s App Store, according to Strategy Analytics.

IT teams will save precious time and effort by utilising the existing built-in native apps that support businesses. For example, Apple Business Manager provides zero-touch deployment and configuration for thousands of employee devices. Teamed with an Apple Enterprise Management platform,  IT can remotely personalise each device with the tools that employees need to deliver work more efficiently such as claims and data-entry processing.

The insurance sector should also utilise existing advice channels and resources to get best practice advice. Apple is one of the few providers to have created a hand-picked task force of partners in mobile strategy, app development and back-end system integration, that businesses can call upon to maximise their Apple hardware, software and service investments.

 

It’s all about balance

The need for improved underwriting efficiency and data quality within the insurance world has meant insurers must find ways to be both operationally fast and water-tight in managing confidential customer information in 2021. Errors result in breaches, heavy fines, loss of customer trust, reputational damage and even jail sentences.

IT must have a single-pane view of all devices to reduce the risk of a breach and manage hundreds of devices, each with its own personalised inventory of apps. An enterprise management solution enables IT to manage data access by delivering specific permissions to apps, files and tools for the employee to remain productive.

 

Cut the red tape

Regulatory red tape is a barrier to the adoption of emerging technology. Businesses do not want to lose valuable time and effort in introducing new technologies that need to be assessed and measured against the latest compliance requirements. To encourage businesses to find new ways of working and remain secure, the Centre for Internet Security (CIS) has created a set of 20 security controls to follow. Commonly known as the CIS 20 standard, the controls help businesses walk through recommended steps such as updating software, logging and auditing, managing user environments and system access.

Since employee experience is paramount to the successful adoption of emerging technology, Apple Enterprise Management platform solutions make the roll-out of comprehensive compliance and benchmark requirements simple and less intrusive. With a few clicks, the IT team can confirm each device adheres to the security standards and remains compliant at any time. Dated software can be updated by employees and the IT team can ensure the most sensitive information is protected with the latest versions and updates. When regulations change, insurers can add in and deploy new requirements through the platform without wasting time.

 

Long-term benefits

Insurers around the world experienced a surge in motor, home and consumer goods claims during the first wave of the pandemic as more people relied on and invested in personal transportation and online shopping.  According to KPMG, UK insurers also offered free motor and enhanced home cover for National Health Service (NHS) workers, and extended business cover to support employees working from home. As customer support lines collapsed under the sheer volume of calls, the insurance sector went online to reserve phone communication for the most urgent.

Consumer demand for accessible innovative new services will continue to be a key focus for many in the sector who need to make up for the lost time. This is where remaining agile will be imperative or insurers will find themselves losing out to the competition.

Digital services, made possible through AI, IoT and data analytics, deliver instantaneous, richer, and more meaningful insights for insurers to create unique and personalised covers. They enable employees to produce results quickly and draw in new revenue streams, without the need to rip-and-replace existing technology.

Through the provisioning of local user accounts and simple password synchronisation of cloud services, insurers will help employees achieve multi-factor authentication and single sign-on. A single set of cloud identity credentials reduces disruption in creating new passwords requests and empowers employees to tap into new tools more quickly.

 

Looking into the future

The 2020 world health crisis drove many businesses, including the insurance sector, to work remotely to survive. And while the road to recovery will take time, it has encouraged them to re-evaluate their long-term working environments and investments to remain agile. Despite uncertainties, businesses are now looking to create hybrid working environments where they can occasionally untether from the office as a way to continue improved experience and productivity levels. A recent report by PwC suggests that splitting time between the office and home is expected to become the new normal.

Why go back to the way things were when there are more benefits to be had in this new normal? Through an enterprise management platform and native productivity apps, it’ll be a win-win situation where employees remain positive, IT ensures its technology investments are fully utilised, and the business remains protected, reaping the benefits of new services and improved engagement with employees and customers alike.

 

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