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How financial services organisations can address the ‘Vulnerability Lag’ and safeguard their most important digital assets

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Trends in fintech in 2022

By Barry Cashman, Regional Vice President for UKI at Veritas Technologies

 

As the Greek philosopher, Heraclitus, is famously quoted saying, “change is the only constant in life”. This was all too true when businesses were faced with a global pandemic that no one could have seen coming. In order to adapt and keep afloat during such unprecedented times, businesses needed to innovate fast, but their security measures struggled to keep pace. Financial services organisations were especially stretched by these challenges, as employees shifted to new remote working patterns, more services moved online, and new products were introduced at speed, without the necessary steps taken to ensure all the new technologies that were added were protected.

This created a ‘vulnerability lag’, where systems and data have been left unprotected and open to attack. And while businesses were right to prioritise continuity for customers and empowering the shift to remote working, the time has come to redress the balance between rapid innovation and security, to protect from increasingly sophisticated cybercriminals.

 

The hard facts

Cybercrime is set to cost the global economy $10.5 trillion annually by 2025. Industry research reveals that, in the UK, the average cost of a ransomware attack is around £1.5 million. All things considered – the potential regulatory penalties, the impact of downtime, the cost of losing data that may be irretrievable – the financial repercussions for failing to protect your data could be crippling.

But the cost of an attack often goes far beyond the monetary value a company will pay out in potential ransom payments and penalties for regulatory non-compliance. Trust is the biggest loss a company could ever face – when customers lose their trust in an organisation to secure and protect their data, it’s very difficult to win it back, especially for an industry such as financial services.

Building an industry on collecting and using highly sensitive customer data is a double-edged sword – while financial services companies can take advantage of a vast pool of valuable customer data to offer personalised services and explore new revenue streams, if this data falls into the wrong hands, it could damage livelihoods beyond repair. This makes the industry a very attractive target for cybercriminals.

Many financial services organisations globally are not managing their data as well as they could be. According to recent Veritas research, companies in the financial services space are more likely to be struggling to keep pace with their security than those from most other sectors, with nearly half (48%) stating that their data security is lagging behind their digital transformation deployments. The average across all industries is 39%.

Further, financial services organisations that want to eliminate their vulnerability lag within a year would need to spend on average an additional £1.99 million and hire 29 new members of IT staff each.[1] £1.99 million is 5% more than the average required across all sectors, which may be disappointing news for IT leaders in the sector, given that they already typically spent 19% more than their peers on IT initiatives last year.

Surviving any kind of ransomware attack always starts with understanding your data – what it is, where it is and what it’s worth. Yet, most businesses lack clarity about the data they might need to protect, with the average UK organisation admitting that 39% of the data their organisation was storing is “dark” – that is to say, they don’t know what it is – and that a further 51% is Redundant, Obsolete or Trivial (ROT).

 

A light at the end of the tunnel

While the pressures that rapid digital transformation put on IT departments weren’t unique to the financial services sector, its position as a highly attractive target to hackers may have meant that the industry has felt them more acutely. With hackers beating at the door and limited resources to push them back, as well as tightening industry regulations, it can feel like the IT teams are between a rock and a hard place.

But astute IT leaders are partnering with data protection providers that can minimise the admin burden of data protection through simplified tools leveraging artificial intelligence (AI) and machine learning (ML). Taking this approach can help financial services organisations accelerate their security rollouts and stop their protection infrastructure from lagging behind their digital transformation.

Allowing AI and ML to take on the time-consuming manual processes also enables skilled IT team members to focus on innovation projects, rather than on playing ‘catch up’. Ultimately, these processes can still be human-governed, with AI doing the leg work.

Despite any company’s best efforts, ransomware attacks are a matter of ‘when’ rather than ‘if’, so knowing ‘when’ becomes absolutely critical. What distinguishes one victim from another is their ability to resist and bounce back.

[1] Figure converted from $2.61 million using the latest exchange rate at the time the report was published.

 

Business

How can businesses boost employee experience for finance professionals?

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By Martin Schirmer, President, Enterprise Service Management, IFS

Over the course of the last year, The Great Resignation has seriously impacted organisations across the globe. Staff are quitting in huge numbers, leaving companies unprepared and struggling to fulfil their workloads. In fact, mass departures are happening at all levels of the labour market, as employees attempt to adapt to the hybrid working model and growing socio-economic uncertainty.

In light of this, optimising the employee experience (EX) to attract and retain talent has become a top priority for employers. Organisations have come to understand the necessity of taking immediate steps to drive employee engagement and reshape workplace culture.

The financial services (FS) industry is no exception to this trend. From increasing employee burnout to growing career dissatisfaction, the pandemic has exacerbated the need for transformation across finance teams. This is exemplified by recent data from Spendesk, which found that approximately 40% of finance professionals are willing to leave their roles or already have concrete plans to do so.

Organisations looking to get ahead of the competition must put in extra efforts to retain their existing workforce. The fact is that employee expectations and requirements have irreversibly changed, with more workforces becoming increasingly distributed. Today’s hyper-connected workforce values flexibility and simplicity, and it is organisations which offer these experiences that will succeed in the long term.

As part of this process, finance companies must look towards the power of technology to create seamless user experiences across devices. From automating workflows to improving overall efficiencies, Enterprise Service Management (ESM) can help organisations to boost user satisfaction and go that extra mile for their employees.

How poor EXs are driving finance teams to quit

With over 40% of employees spending a significant proportion of their time carrying out mundane, manual tasks, it is not surprising that poor EXs are having a detrimental impact on job satisfaction. Finance teams in particular have been slower to digitise core processes, leading to a heavy reliance on manual tasks. This not only increases the amount of time spent on each task, but also impacts the engagement levels of finance professionals who cannot focus on more strategic aspects of their roles.

As a result of the pandemic, flexibility has also moved to the forefront of finance teams’ desires. Given the fast-paced nature of this industry, the conversation surrounding work-life balance has increased rapidly. Failure to offer flexible working policies, coupled with a lack of technology to facilitate this flexibility, has led to poor EXs across the board.

Most notably, the overarching move to omnichannel, digital-first approaches has dramatically reset both customer and employee needs. Finance is the third-slowest running corporate function behind legal and IT. Operating in a competitive environment, 73% of finance operations are facing pressures to speed up, improve efficiency, and prioritise automation.

Mitigating the problem using technology

ESM, an offshoot of IT Service management (ITSM), is the cornerstone of smart digital transformation for organisations. It can help finance teams to streamline and automate routine processes, such as monitoring the status of service requests, approving expenses, sending invoices, and tracking payments. In turn, this will free up employees’ time, reducing the burden of manual tasks and enabling them to focus on the more strategic tasks.

Another advantage ESM can offer finance teams is the ability to adapt to each department’s minimum requirements for data privacy. Accounting, for example, needs additional layers of compliance built into the system.

ESM can also facilitate cross-departmental collaboration, helping finance professionals to communicate with the wider business and perform tasks more effectively.  Organisations can use ESM to incorporate all internal services into a single platform, offering employees a well-rounded view of the business and promoting a sense of community across all levels of an organisation. This will boost productivity, whilst enhancing visibility and control.

Ultimately, the current job landscape has brought with it a new set of challenges. Organisations in the FS industry looking to navigate the storm and retain top talent must refocus their efforts on bolstering the EX. Embracing a new era of technological innovation that empowers employees and boosts engagement is a critical step in this process.

 

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The penny has dropped – the finance sector needs Data Governance-as-a-Service

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By Michael Queenan, Co-Founder and CEO at Nephos Technologies

 

In our data-driven world, the amount of data is growing exponentially and it’s predicted that the amount generated each second in the financial industry will grow 700% this year. Leaders of financial services organisations have realised two things since the start of the pandemic – that data on their customers and services is their greatest asset and that they must embrace technology to make intelligent business decisions to grow successfully and outperform competitors.

Since the financial sector holds arguably the most valuable and sensitive information, organisations must do more than just store this data. They need to ensure its security, integrity, and governance so that it’s useful in improving the brand’s customer experience, innovating products and services or predicting future trends to improve risk management.

Yet without a robust data governance model – a strong set of rules and processes for what data means, and how it is categorised, owned, accessed, stored, and used – data is worthless. Only when an effective data governance model has been established, will data meet regulations and be secure. Data leaders must shift gear in their data processes to avoid hefty compliance penalties and unlock potential value from their data assets.

 

The data governance challenges faced by financial sector organisations

The barriers for achieving ‘good governance’ are many and varied. Ignorance of the benefits of data governance is a major hurdle for developing a governance strategy. Many financial firms have invested – at significant cost – in data governance tools, but struggle to deliver the benefits they are looking for. Many don’t have the right skills and resources to maximise or set the right metrics to measure the business value. Some are compromised by unoptimised gaps in their approach.

With many different elements to master, data governance is complex – from identifying the right tools to managing the challenges presented by encryption, all whilst ensuring that data quality is sustained and data is managed responsibly.  The negative impact of misplaced investment in ineffective data governance strategies can be significant, for the short and long-term.

 

Why data governance matters

With the acceleration of digital adoption in the financial services industry, it has become crucial to deliver seamless, intelligent customer experiences. Data governance is the key to managing data flow, ensuring compliance, and scaling up. Proof that data governance matters is evident in the Master Data Management Market growth prediction, from $16.7 billion in 2022 to $34.5 billion by 2027.

Data governance is a comprehensive methodology for ensuring the quality and security of the company’s data. The various benefits of an effective data governance strategy include minimised risk, coherent policies, metrics and processes, and better implementation of compliance and enhanced data value. However, for financial services, there are significant advantages as a result of the following:

  • Data governance saves the company money by increasing efficiency. Precious time can be saved by having good quality data and a single source of truth, with less duplication of data, and less time needed to correct data errors.
  • Good data governance gives the business confidence in having accurate and trustworthy data, the holy grail for delivering outperforming customer experiences.
  • A data-driven culture can also be introduced to your business through good data governance. With the ability to gather critical customer and market insights that can guide the direction of your business, data governance allows financial institutions to drive innovation and gain competitive advantage.

 

Bridging the governance gap with Data Governance-as-a-Service (DGaaS)

Increasingly organisations are turning to the ‘as-a-Service’ model to bridge the gaps in their data governance capabilities, as well as ensure critical alignment between objectives and results. This dedicated approach aims to minimise the risk of investments and delivers the strategy and proven technologies required to ensure data governance success.

DGaaS can be applied across each major component required to deliver good data governance. First, it uses software tools to scan all data within a typically complex financial services data infrastructure in its data discovery and classification phase. Without this detailed insight, organisations can’t always identify their data assets, any data mishandling and the level of risk generated.

The next part of the process is creation and documentation. This means organisations can drive their governance objectives through to execution, while removing the operational and recruitment overheads, which means they can purely focus on value created from data. In doing so, organisations can convert the raw outputs from the toolsets into meaningful business outputs.

With a holistic approach, DGaaS allows financial services organisations to focus on the transformational potential of data while critically staying compliant.

 

Reaping the benefits

Data is a vital asset to enable financial sector organisations to build the right capabilities to deliver their services and remain competitive. With a robust data governance model, financial firms can assess risk, predict trends, and seize market opportunities based on data-driven insights. Only data-driven processes, built on high quality and effectively governed data, will enable them to build outstanding customer experiences. It’s essential that leaders realise data governance is a fundamental discipline, not a luxury, and establish an effective model to formalise processes and responsibilities before their data lets them down.

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