By Faiz Shuja, co-founder at SIRP
The financial (finance) sector today is dominated by all things digital. Consumers and businesses alike can now manage everything from paying bills to applying for loans entirely through online services, eliminating the need for many traditional face-to-face services. Agile young challenger banks built entirely around digital native approaches have emerged to claim large chunks of the market. Established banks meanwhile have been heavily investing in their own capabilities.
Traditionally slower than other industries to adopt new technologies the financial sector, under pressure to stay competitive and relevant is widely embracing the digital switch-over. IDG estimates that this investment will produce worldwide compound annual growth in digital transformation of 20.4 percent between 2017 and 2022. It puts the finance sector above average compared to other industries.
Trading conditions arising from the Covid-19 pandemic are further accelerating the race to go digital. Housebound high street customers are increasingly accessing their accounts online while staff across all operational areas are working remotely.
However, as banks and other financial organisations expand their digital footprints, they also increase their exposure to cyber threats. Investment in digital transformation must therefore be matched by attention to security capabilities.
Finance in the firing line
Most cyber-attacks are the work of opportunist criminals on the hunt for a big payday. Given the sector’s close relationship with managing capital in all its forms, it’s scarcely surprising that financial institutions are among the most popular targets for cyber criminals seeking quick profit. Indeed, a recent report from the IMF states that the high volume of sensitive financial information held by banks makes them “one of the most highly targeted economic sectors for data breaches”.
Finance firms face a variety of cyber threats. By far the greatest risk is posed by APTs (advanced persistent threats), often planted by criminal gangs or state-sponsored threat actors. A data breach could mean crucial financial information from millions of customers is stolen, or the withdrawal of large sums of money.
The sector also tempts insiders to misuse their knowledge and access privileges to beat security for personal gain. Unwelcome outcomes include insider trading activity or direct data breaches. The Capital One data breach was a prime example.
Alongside direct network infrastructure attacks, the sector must also contend with threats aimed at customers. Phishing attacks – emails that impersonate the company’s trusted brand – are a common way to trick customers into divulging personal or financial information.
Keeping up with digital threats
Financial organisations have always been tempting targets for criminals, from simple smash-and-grab bank robberies to sophisticated fraud schemes. It’s one of the reasons they are one of the world’s most heavily regulated industries. As a result, the finance sector is highly mature in respect of policies and procedures governing data privacy and security.
Cyber crime, however, presents a very different proposition. Threat actors continually adapt their tactics to find new vulnerabilities and penetrate defences. To protect their capital and their customers from these ever-evolving threats, banks and other financial institutions must match their antagonists for agility.
Accordingly, they have invested heavily in threat detection and prevention technology. Measures typically include web and app security to reduce exploitation of online and mobile customer interfaces, EDR (endpoint detection and response) to identify attacks on internal devices, and behavioural analytics to detect unusual user activity that signifies both external intruders and malicious insiders.
Accelerating with automation
To truly keep up with aggressive, fast-moving threats such as APT groups, detection and prevention measures are not enough. Banks must also be able to respond to and shut down attacks before they cause significant damage.
Once a threat is detected, it can take around 45-60 minutes before security analysts investigate and respond. Each minute that ticks by increases the chances of the threat actor exfiltrating essential data or causing significant damage to the network.
It’s not just about time either. Security teams are also responsible for managing high volumes of alerts. Research has found that security teams with too many incoming alerts will often either disable certain alert functions to reduce the numbers, or simply ignore some alerts entirely. In both cases the chance of incurring a serious breach goes up.
Keeping up requires financial firms to automate as much of the response process as possible. While there’s no substitute for professional security analysts to scrutinize and resolve advanced threats, today’s automated systems can handle much of the time-consuming investigative workload.
Automation, however, is only effective when current processes and business demands are properly understood. Furthermore, it is impossible to automate everything overnight. Firms must assess their current situation and start with the areas that will benefit most.
The systems that generate the largest threat alert volumes, typically phishing or web-based attack analytics, are a good place to start. Automating these first immediately eases the burden on security resources.
Organisations should also adopt a risk-based approach to automating security management processes. This means ranking potential threats according to their potential to damage the business. Sometimes this is obvious – for example if a receptionist and the CEO are repeatedly on the receiving end of attacks – responding to the latter is a clear priority. However, it is not always so clear cut. Automation tools like Security Orchestration and Response (SOAR) offer a risk-based approach tailored to an organisation’s unique structure and objectives. Having set these thresholds, the organisation can pass alerts from their SIEM (Security Information and Event Management) systems through them to form a dashboard. From the intelligence provided by these dashboards, security teams can quickly identify which threats are the most serious and prioritise steps to mitigate them.
As the financial sector continues to digitise, it will remain a top target for cyber criminals. The evidence is that attacks are increasing in both volume and sophistication. Using automation to increase the speed and efficiency of their response capabilities, provides financial institutions with a fighting chance of keeping one step ahead of adversaries as they continue their digital transformation journeys.
TAPPING INTO THE RIGHT MINDS
David Holden-White, co-founder and managing director, techspert.io
The world is awash with information. Analyst house IDC estimated that more than 59 zettabytes of data would be created, captured, copied and consumed in 2020, and that the amount of data created over the next three years will be more than what was created in the past 30. The boom in consumer technology and the rapid improvement in mobile connectivity has meant that the 48% of the globe that owns a smartphone has near instant access to all the digitised, publicly available information in the world in their pocket.
A world overloaded by information
It’s no surprise that people talk of information overload, or how much it impacts productivity. It’s not new either. A 2012 study from McKinsey & Co highlighted that nearly a fifth of professionals’ time was spent searching for and gathering information, half of the time they spent undertaking role-specific tasks. This is only likely to have increased as we’ve become more dependent on digital tools and services.
On top of that is the realisation that, thanks to social media, we’re living in a time when anyone can be an influencer or thought leader if they shout loud enough. It doesn’t matter whether you’re pushing trainers or cloud computing, whether your audience is a broad spectrum of consumers or a niche group of B2B buyers; the tools and resources are pretty much freely available to build a profile and push your message out there.
The result is that it’s becoming increasingly hard to find the value amongst vast and accelerating volumes of online data and noise, and to use that data to make accurate, effective decisions.
This is something we need to be able to do. We’re all expected to work faster, to make better decisions more quickly. The pandemic showed that certain changes don’t need five committees, two working groups and a proof of concept to take place before decisions can be rubber stamped. At the same time, no matter what industry you work in, there will be competitors who are more agile, more flexible, and seem to be much better at making decisions and capitalising on opportunities.
Yet those decisions still need to be backed by evidence, by irrefutable knowledge. What’s more, there’s only so much data can give us. We need the insights stored in the minds of true experts, with lived experiences of the particular problems, markets and technologies in question. In accessing this, we can develop a decision-making edge in businesses that competitors don’t have, that can be used to drive entrance into new markets, or for winning investment decisions.
Limiting risk in investment decisions
As we all know, investments are inherently risk-related, so, anyone making such a decision will do all they can to minimise their risk exposure, especially in volatile post-covid markets.
To do that requires being able to identify, consume and process information quickly. Investment opportunities, particularly in industries with significant growth capacity, come around quickly and get snapped up fast.
Those decisions will incorporate analysing and drawing insights from raw data, using publicly available and analyst-produced information. But there is also an opportunity to draw on human insights, from leading experts in relevant fields, to get a sense of the story that 0s and 1s can’t properly tell yet. Tapping into the right minds is essential to informing investment decision-making in 2021.
In an ever-growing haystack of information, the challenge is finding them quickly. Plus, once they are found, there’s a tendency to keep using them, or to use them as a gateway to others in their network. While there’s nothing inherently wrong with this approach, it leaves investors exposed to a lack of diversity in thought that makes getting to an unbiased view of the world impossible. At the same time, casting their net wide and finding lots of experts is resource and time-intensive, at a point when time is one commodity in short supply.
So, what’s the solution? Ironically, given that the challenge is bringing the right human insight into the process, the answer could lie in technology, specifically artificial intelligence (AI). AI-powered platforms can take a request for expertise and run searches through all available published and credible material to recommend the most appropriate experts for the project in question.
It’s true that there are already services that recommend experts, but they are heavily manual and therefore slow and imprecise. It’s also true, there are also both negative and positive connotations being attached to AI. No technology is without its flaws, and if investors were relying on the AI platform itself to provide expertise then there would be cause for concern. Services that provide access to the experts themselves, however, are providing a fast way through the noise and data – it’s a car to the destination, not the destination itself. Once investors and experts are connected, the former has access to the relevant insight the latter holds in their heads. What AI has done is rapidly scan through millions of people of talent to highlight the relevant knowledge holders with pin-point accuracy.
Using technology to highlight the best human knowledge
Using an AI technology platform to find the most relevant human is a way of taking a resource-consuming process and finding what’s needed in a thousandth of the time. In that way, investors can get fast access to the human insight they need to make the best decisions, allowing them to capitalise on opportunities and not miss the next big growth opportunity.
FINANCE DERIVATIVE 2021 TRENDS – NUAPAY
By Brian Hanrahan, CCO, Sentenial, parent company of Nuapay
The past year has accelerated payments trends that already existed, as consumers looked for alternative ways to manage their money and purchase goods and services during the pandemic. In 2021, it’s easy to see how these trends have been cemented into the mainstream.
Digital payments grew significantly in 2020, as a direct result of the pandemic. Open Banking payments in particular increased significantly, with research from the UK Open Banking Implementation Entity (OBIE) showing that the ecosystem set to hit three million users shortly , despite disruption caused by COVID-19. This can be partially attributed to the growth in Alternative Payment Methods (APMs) enabled by Open Banking, particularly in mobile commerce but also in some physical scenarios using technology such as QR codes.
Quick Response (QR) codes enable consumers to make payments securely and efficiently from their mobile devices. Recent research concluded that customers across the UK and Europe are increasingly relying on QR codes, with 80% of smartphone users saying they had scanned a QR code at least once in their lifetime, and 40% added that they scanned one in the last seven days. Respondents named, among others, cafes and restaurants as places where they used a QR code as a payment method, demonstrating that this increased adoption goes beyond Covid related Track and Trace schemes.
Importantly, more than 50% of all respondents said they expected to use QR codes for payments in the near future, indicating that consumers will begin to expect QR codes to be available in face-to-face payment environments like brick and mortar stores.
Another range of APM use cases that will become more commonplace after a relatively slow start in the UK are wearable payment devices. The wearable tech market was valued at approximately $27 billion in 2019, and is expected to rise to $64 billion by 2024, partially due to a greater increase in consumer adoption in 2020 than had been predicted.
Innovative wearable technology, like K Wearables’ K-Ring, enables consumers to seamlessly make payments while eliminating the need to handle cash or touch a card terminal PIN pad. When enabled by Open Banking technology, rather than traditional card rails, merchants also benefit by receiving their funds significantly faster and much lower processing costs. As merchants become more familiar with the benefits of accepting payments via Open-Banking enabled wearables, I anticipate we’ll begin to see merchants incentivising their customers to use them.
Indeed, recent research found that 30% of consumers said that a trusted brand could encourage them to use Open Banking as an alternative to credit or debit cards, while more than one in six said a retailer could incentivise them to use Open Banking through loyalty schemes. Additionally, more than half of all UK consumers, and over 60% of mobile banking users would be willing to pay via Open Banking if provided with the opportunity.
Consumer subscriptions powered by recurring payments will also continue to grow throughout 2021. Subscription-based models have traditionally been difficult to implement for SMEs, due to the difficulties surrounding collecting recurring payments. As the Account-2-Account payments market has become more competitive, providers have raced to provide technologies that enable recurring payments seamlessly, primarily based on direct debits. In turn, this has meant that SMEs can provide an efficient and secure payment experience, and meet the ever-growing demand for subscriptions from their customers.
Even pre-pandemic, more than 60% of adults worldwide used at least one subscription service, and in Europe alone spent an average of €130 per month on subscriptions. With millions more consumers discovering the convenience and even excitement of a monthly coffee, pasta, and even toilet roll subscription in 2020, I foresee recurring payments staying the course through 2021 and beyond.
Overall, Covid-19 has advanced the migration of business to online and mobile, in order to maintain their service to customers who they can no longer attend to in person.
Competition has dramatically increased in the digital space, and delivering seamless customer journeys has become a necessity for businesses to survive. This is particularly true for retailers, who are already turning to alternative ways for their customers to pay.
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