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Addressing the talent gap within cybersecurity

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By Merlin Piscitelli, Chief Revenue Officer, EMEA at Datasite

 

Rising geopolitical tensions and increasingly sophisticated cyberwarfare tactics have meant that cybersecurity threats are now more prevalent than ever. In current times, the number of cybersecurity attacks are increasing in volume and intensity on a global scale and if a company is not properly equipped to deal with this reality, it could directly impact their survival.

Recently, some sections of businesses were compromised, taken offline, and employee accounts within key microchip and electronic powerhouses were exposed due to cyber-attacks. Most alarmingly, some of these attacks were perpetrated by the same hacking extortion group.

As digitalisation continues to increase throughout the world, and events like Russia’s invasion of Ukraine take place, it is now more important than ever to focus on combatting cyber-crime. The industry understands this, as record levels of investments have been pouring into the sector to advance our capabilities within the field.

The cybersecurity surge

Within the last 12 months, the cybersecurity sector has seen major growth with now almost 2,000 firms active within the UK providing cyber security products and services. In 2021 the UK cybersecurity industry contributed £5.3 billion to the economy, an increase of about a third from 2020, and cybersecurity firms have raised more than £1 billion external investments in 84 deals. It’s therefore fair to say that the acceleration towards digitalisation caused by the pandemic has meant businesses have had to increase their cybersecurity efforts, leading to increasing demands within the sector.

Merlin Piscitelli

As the industry finds new solutions to combat cyber-attacks, cybercriminals are continuing to explore new tactics to ensnare victims. This has resulted in higher demands for those skilled within the industry. Now, with over 2.5 million cybersecurity jobs available and the war for talent rapidly gaining momentum, it’s clear that pressure is increasing.

Cybersecurity and data protection is a strategic investment and a highly specialised endeavor. It can be more cost-effective (especially for small and medium size firms) to outsource this responsibility and partner with a vendor to design and implement solutions. Business leaders will need to ensure they are working with a reputable partner that can offer the best level of protection and technical expertise to fit organisational needs.

The talent gap

While demands are currently high, the supply isn’t there to match. In the UK, the cybersecurity talent pool has fallen short by around 10,000 people a year, and in the previous 12 months, the UK’s cyber skills shortage rose by more than a third. As a result, cybersecurity is now the most sought-after tech skill in the UK.

With more than half, 54%, of UK CEOs believing cybersecurity presents the best opportunity for TMT dealmaking over the next year, demand will rapidly outstrip supply of expertise unless there is a rapid change within the industry.

Championing the workforce

Businesses have had various strategies when looking into combatting this issue. When asked what the main drivers of recent and future cross-border technology acquisitions are, one-third of UK M&A professionals surveyed cited access to skilled/specialised talent.

Investing in your workforce is the tried and tested way of mitigating against cyber-attacks and managing risk. Having access to the necessary resources to protect your digital ecosystem and build momentum by upskilling individuals already working in the tech space, along with attracting new talent, will be crucial to tackling the current professional shortfall.

Furthermore, bringing diversity and inclusivity into the process will help truly overcome the war for talent, as businesses will need to acknowledge the correlation between the skills shortage and the lack of inclusivity needed to diversify the sector.

Ultimately, addressing the current skills gap within cybersecurity will require combined efforts from businesses, academia and governments. Championing students to take an active interest cybersecurity and go through the necessary training to develop the skills needed in the industry will go long way in evening out the playing field.

It is only by investing in developing cybersecurity talent that will we have enough people with the expertise required to protect organisations digital ecosystems as the threat landscape becomes more diverse.

 

Business

How Big Data is Transforming Bilateral Trading

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By Stuart Smith, Co-Head Business Development – Data & Risk

 

Since its inception, Big Data has been an important part of how firms have identified and constructed quantitative trading strategies with hedge funds depending more on quant strategies which rely heavily on big data driven analytics.

As big data technology continues to move from being a specialised technical capability to being a commoditised capability available on a range of easily consumed technology platforms, its use within the financial derivatives will continue to increase beyond the initial quantitative driven capabilities.

At the same time, the number and range of available data sources is increasing rapidly. Whether it’s the increase in alternative data sets or new technology enabling firms to simply keep more of the data they have been creating, the volume of data available is increasing dramatically.

 

Big Data in Risk Management

Risk Management has always had requirements which have driven a close collaboration between business and technology to make available risk analytics useful for the business to make better decisions. As technology becomes more advanced, the metrics available continue to improve as well. This is typically because many risk metrics require high numbers of scenarios and valuations to correctly identify risks in multiple scenarios. To maintain flexibility, this has led to an explosion of data to manage. Firms are increasingly keeping all this data available which can run into many Terabytes (TBs), much of which needs to be ‘In Memory’ to make it accessible to analysts.

Stuart Smith

To achieve this big-data, technology is critical to allow firms to move large volumes of data quickly and easily from affordable long-term storage into high performance in-memory analytics. Big Data technology is ideal for this type of problem to enable large volumes of data to be recalled from across multiple stores and appropriately aggregated or filtered based on the analysis which users are requesting. Whereas in the past, analysts would have to accept that data outside of the last 3-5 days is only available in a summarised format, they can now expect that the data can be re-hydrated quickly and easily from cloud data stores and available to them in an easy-to-consume web interface.

This can enable much more dynamic types of analysis, for example where a new risk is identified, through analysis of a recent data set it’s now possible to find a long history of that risk, whereas previously it would have been lost through summarisation and fixed reporting processes.

 

Collaborative Data Sets

More big data stores are being created as the industry becomes more collaborative and uses increasing numbers of fintech solutions and platforms. With this change come new ways to analyse data and provide new insights.

For instance, through the automation of collateral exchange, an historical store of margin calls, payments and disputes has been created. This history provides a resource for banks to understand their performance in accurately issuing and making margin calls based on derivatives and compare their performance to that of the industry as a whole. The example below shows how a firm can be benchmarked while holding other institutions data private.

These types of analysis are new and could not be delivered without the centralised collaborative data model. It can prove to be instrumental in improving firms’ overall operational efficiency and client service.

It also provides an opportunity for Machine Learning techniques, based on big data sets, to analyse and predict payments requests which are likely to be disputed and potentially identify causes before an actual dispute is even raised. This type of ‘self-healing’ process can only be enabled by a large history of data through which algorithms can be trained.

In the case of Initial Margin (IM) calculated by ISDA SIMM* a new set of challenges have been introduced through having a two-sided risk calculation as part of the process of deriving payment information. This adds another level of complexity to the resolving of disputes; however, the potential offered by having large volumes of data opens up new options on how this challenge could be solved. The long history of Common Risk Interchange Format (CRIF)** data provides a long-term view of the sensitivities for most OTC derivatives, which can enable firms to identify basic issues like stale market data day over day. However, as with most detailed analysis differences in models, they can also be identified through looking at differences over long periods of time. Identification of these types of model discrepancies can help firms to be more proactive about reviewing their modelling deficiencies to ensure that differences don’t lead to disputes.

 

Looking ahead

The sheer volume of data can be an industry-wide challenge with firms having to manage disparate, needlessly duplicated and ultimately overwhelming information. Creation of an industry standard for reporting and analytics is, therefore, crucial to enable firms get clarity and valuable insights from the masses of data and centralise the information as a single data layer. Acadia has designed Data Exploration (DX) suite to be one-of-its-kind big data analytics platform to help sell-side, buy-side and fund administrators see its market positioning, trends and analysis of industrywide metrics.

The impact of big data will only grow and the industry is left with no choice than to evolve the use of technology, whether that is to drive quant strategies for hedge funds, more dynamic forms of risk management or larger shared industry data sets. All of these applications rely on underlying big data technology platforms to provide distributed analysis capabilities. As these capabilities continue to develop so will the types of analysis which are available to firms.

*The ISDA Standard Initial Margin Model (ISDA SIMM™) is a common methodology for calculating initial margin for non-centrally cleared derivatives, developed as part of ISDA’s Working Group on Margin Requirements (WGMR) to help market participants meet the BCBS-IOSCO margin framework for non-cleared derivatives.

** The CRIF file (Common Risk Interchange Format) is the industry template used to hold and exchange sensitivity data. ISDA’s calculation specifications are used to produce Delta, Vega and Curvature sensitivity numbers at Risk Factor-level

 

 

 

 

 

 

 

 

 

 

 

 

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Banking

How Biometric Payments Are Tackling Financial Exclusion

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By Catharina Eklof, CCO, IDEX Biometrics

We are moving closer to a cashless society: 89% of payments in the UK are contactless and, globally, contactless payment transaction values are set to surpass $10 trillion by 2027. Ease, convenience, security, and inclusion have accelerated the transition away from cash. However, many of today’s current payment solutions are leaving entire cross sections of society behind: including the most vulnerable, underserved, and unbanked populations.

Developments in the payment sector over the past decade still aren’t a perfect fit for all. Those suffering from dementia, literacy challenges, or impaired vision can find current payment methods – with a PIN to remember – extremely challenging. Financial inclusion requires us to make payments accessible to all demographics. Though the financially excluded represent minorities, they account for an estimated 1.7 billion people – almost a third of adults globally.

Enabled by huge advances in technology, our evolving social dialogue has become accelerated and unfettered, on a global scale. It is critical to harness technology as a force for dynamic economic improvement: democratizing access to banking and payments. As such, we need to look beyond mobile wallets or digital payments and support those in need of easier access to payment and fintech solutions. A more inclusive form of payment technology is essential.

Catharina Eklof

 

Personal Identity as the New Pin Code

Many communities remain vulnerable or underserved by the functionality of traditional payment solutions such as bank cards. These products are, at their core, only linked to the owner by way of name and signature, offering limited security and protection. With contactless payments, no link whatsoever is required to a card for payment.

In an increasingly contactless society, fraud and digital security are growing concerns. Credit and debit cards can be used by anyone, and card readers don’t understand if cards have been apprehended illegally. Vulnerable groups may also struggle to input their credentials into what can be, for some, a complex system. Empowering those vulnerable groups therefore means providing them with the independence to access payments with greater ease.

Biometric payment cards play a significant role in bridging the gap between the financially underserved and the financially included. Simple and secure financial authentication, like facial or fingerprint recognition, allow payments to become about who a person is rather than what they know or remember. If individuals can be personally linked to a payment card via biometrics, it can address the significant 1.1 billion people worldwide who are currently without official government identification or access to it. In Nigeria alone, 149 million individuals lack the legal means to evidence their identity, while in South Africa, 12 million individuals are excluded from the country’s formal identity system.

Fingerprint authentication has the added benefit of optimizing security, in that it requires the individual to opt into a purchase, avoiding any issues of unauthorized or unintentional payments from having a reader placed near the card owner’s face. This provides increased independence for the blind and visually impaired, who account for an estimated 2.2 billion people globally, as it allows for seamless payment authentication without sensory barriers. Similarly, biometric smart cards can be transformative for more than 55 million people living with dementia and Alzheimer’s, as it enables access to payment without the difficulty of remembering passcodes.

Literacy is also a little talked about hurdle to inclusion. Globally, there are 750 million “functionally illiterate” individuals struggling to use and understand financial products. Across all levels of education, biometric authentication is a universally inclusive concept. It is easy to communicate and understand that one’s fingerprint is inherent to their identity, and can act as a form of verification. Biometric smart cards facilitate and secure payments with ease by simply requiring their fingerprint to instantly authenticate their own card.

 

Pushing on With Progress

Even the most reluctant individuals are likely to have succumbed to contactless payments and some form of digitized banking in recent times. This will have the positive impact of making the needed transition to biometrics more seamless. Using fingerprints or facial recognition to unlock phones or access apps is not unusual. If anything, they have been convenient and comforting additions to the surge of tech innovations over the last couple of decades. There is a relief in knowing that these portals are being secured by methods that are almost impossible to replicate.

It is a breakthrough that financial players and governments in the world’s most developed countries still need to catch up with, as emerging economies have already capitalized on biometrics’ capabilities for almost a decade now. In India, for example, internal fraud and leakage from pension payments dropped by 47 percent after transitioning from cash to biometric smart cards. Because the solution bypasses the need for prior credit ratings or credentials, the country has also been able to catalyze safe online banking among previously unbanked adults since biometrics’ introduction in 2014.

Meanwhile, in Pakistan, the total number of mobile wallet accounts tripled from 5 to 15 million in 2015, with an estimated 50 percent of new registered mobile wallet accounts opened using biometric authentication. This was a result of Pakistan’s National Database and Registration Authority’s (NADRA’s) effort of collecting biometric information to allow for more convenient and democratic account opening processes.

Many around the world have been marginalized by both the pace of change in banking and the solutions that have, to this point, been created to accommodate such change. With the mass adoption of biometric smart cards, the same benefits seen in India could be realized on a global scale. If we take on the opportunity in front of us – promoting solutions like biometric smart cards to increase accessibility to the global economy – we will foster a digitally-focused, equitable and inclusive society. This doesn’t just mean ease and convenience, but also security for all and financial inclusion of those who have been left out of digital evolution, until now.

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