Finance

Hybrid working changed cyber risk: How can financial services rise to the challenge?

Published

1 year ago

April 8, 2022

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By Oz Alashe, CEO, CybSafe

We’ve all become familiar with the phrase ‘hybrid working’ over the past two years. More than 80% of businesses have adopted the practice, balancing the convenience of remote working and the collaborative benefits of in-person.

Such shifts don’t usually occur overnight. But in the wake of a pandemic, this is what was required. Some businesses had to manage a complete transition to remote working. Others had to navigate a hybrid model with employees moving between home and the office. Financial services were not immune to this rapid change.

Disruption brings challenges, yes. But it also opens up opportunities and the chance to rethink how things are done. Rapid innovation is a common by-product of rapid change.

It has taken the pandemic for organisations to rethink their approach to cyber security and explore new ways of engaging employees to reduce risk. It highlighted the need to prioritise influencing positive security behaviours at all levels.

Blurring the line between compliance and security

If we’re discussing cyber security and financial services, we need to discuss compliance.

It’s easy to fall into the trap of correlating compliance with security. If you are in financial services, you must follow industry regulations. It’s as simple as that. But this doesn’t mean we have to merge compliance and cyber security to the point where the latter becomes more about reporting and ticking boxes rather than influencing positive changes in culture and behaviour.

Financial service organisations should treat compliance like a driving licence. It is necessary, and you need to have completed the training and passed the requisite tests on acquiring one. But having a driving licence does not make you a safe driver. That’s down to your behaviour behind the wheel.

Compliance is a baseline for security professionals in financial services. While it reduces risk, it’s not enough on its own to make organisations secure.

How do you know if it’s working?

Once the scope of the problem is defined, the focus should be on how to reduce cyber risk in the new working world. For that, you need great measurement. Financial services are used to working with data and putting metrics in place. But, when it comes to human cyber risk, we need to ask what these metrics tell us. Are they measuring behaviour? Are they helping define the risk level of an individual? Are they showing change?

Awareness on its own does not always lead to behavioural change. As a security professional, understanding whether your initiatives influence day-to-day employee behaviour is crucial. If we don’t know this, metrics have little use. As hybrid working becomes the norm, analysing the right data will lead to genuine change.

Building a security-first culture

The ultimate goal is to build a security-first culture. Organisations need to be honest with themselves – are they doing enough to create an environment where employees feel they can raise security concerns?

With the blurring of the lines between compliance and security, it is easy for employees to be wary of flagging security issues. The best results come in an environment where employees feel they can be open and honest about security and report incidents without fear of being reprimanded.

Personalisation is crucial in building this culture. One size never “fits all”. Most employees want to act safely, but we have to accept individual differences to achieve this. People respond to threats differently. Lina in accounting might react differently to the call of an “urgent financial issue” to Abid in customer services.

Appreciating the differences in teams means you can deliver tailored security initiatives. The result is greater employee confidence, changes in security behaviour, and lower cyber risk.

The challenge and the opportunity

Hybrid working presents both a challenge and an opportunity for security culture in financial services. The difficulties influencing behaviour remotely have been a hot topic in the security community. But as organisations adapt to the new working world, we have a chance to elevate how we manage risk for every employee.

By building personalised security initiatives into the broader strategy for hybrid working, financial services businesses can empower their people to be the first and best tool in the bid to be cyber secure.

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Finance

Where is the value in generative AI for financial services?

Published

19 mins ago

September 26, 2023

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Michael Conway, Executive Partner, Data, AI and Technology Transformation Service Line Leader at IBM Consulting

The New York Times recently suggested generative AI has reached a tipping point. According to the newspaper, it’s having a “Netscape moment” – the instant where a technology triggers wide-spread, irrevocable change. Back in the ‘90s the Netscape browser unleashed the nascent power of the internet. Today, generative AI applications that can instantly produce natural language or even computer code are creating a similarly epoch-defining moment.

While it has been the consumer-focused applications of generative AI that have driven sensational headlines and captured mainstream attention, the underlying capabilities have caused businesses to sit up and pay attention. Recent IBM research found that 64% of CEOs face significant pressure from investors, creditors, and lenders to accelerate adoption of generative AI.

The banking sector has a reputation for being on the front foot with technology, but many institutions remain underprepared or unsure about how to profit from generative AI. In tandem, commentators are now talking about us reaching ‘peak generative AI’, adding to the confusion facing leaders. This risks undermining the potential benefits the technology has to offer.

Success in the long-term depends on experimentation and iteration. Here are three fundamentals that businesses can focus on now that will place them among the early winners in the generative AI era.

Michael Conway

Start with the customer experience

Today, every product is a digital product — and every company is selling a digital experience. The increasing demand for a seamless, personalised experience is driving steep competition, but businesses that can tap into the power of generative AI will leap miles ahead of their peers.

For example, a bank could use generative AI to rapidly analyse their own customer data—as well as data from social sources and partner organisations to determine which customers are most likely to take certain actions, such as opening a new account, investing assets, or applying for a loan. The AI system can then help bankers achieve true one-to-one marketing with a personalised strategy and automated, point-in-time customised offers, translated into the customer’s preferred language.

Financial services businesses can also leverage generative AI to shift digital customer service interactions from the customer needing to ask the right question, to the virtual assistant making the right suggestions intuitively. It could ‘remember’ previous conversations with the customer and know which products and services the customer is using, allowing it to provide smarter, more helpful advice. When combined with more human-like language skills, this deeper level of service will help financial institutions to build better, longer-term relationships with customers.

Supporting and upskilling employees

Looking beyond chat bots, AI can also add more value for customer service professionals. With AI and automation tools taking care of the more repetitive, mundane tasks, teams will have more time to work with customers on more complex needs and situations that call for more of a human touch. The businesses that excel in using AI and automation to augment their workforce are likely to have a sizeable competitive advantage.

To be successful, companies must be prepared to invest appropriately in upskilling colleagues so that they can work with the latest AI tools. Working with partners that can bring the right AI transformation expertise can also help businesses to bridge their skills gaps in the more immediate term. At IBM, we’ve set up the Centre of Excellence for Generative AI within IBM Consulting to help clients move forward quickly with putting this capability to work in their business.

Invest wisely in the right AI platform and expertise

It’s important to underline here that, when it comes to business use cases, we’re not talking about any old generative AI tools. While consumer applications can get away with producing incorrect or even offensive output, financial institutions have no such room for error. Customers of banks need accurate, reliable information, delivered in a professional manner that’s consistent with the bank’s overall brand experience. And that’s before you get into the requirements of financial regulators.

Using an AI platform designed for the needs of enterprises in highly regulated industries is therefore a must in financial services. That means the AI models being used are comprised of data that has been screened for things like bias or harmful content and which can be traced to its source. It means the data and the AI models the institution is using have governance controls baked in, so that the outputs are explainable and transparent.

Financial institutions also need AI models that are tailored for the specific domain areas of their business and that are interoperable across different cloud environments, which is important to regulators like the FCA. As IBM AI is built for businesses, we have built all of these requirements into our watsonx AI and data platform for the enterpise.

Commercial value beyond the hype

Are we in a generative AI hype cycle? Yes. But don’t be fooled. This technology is already starting to transform financial services – and virtually every other industry. Those who can harness it effectively stand to reap immense benefits – from more satisfied customers to lower costs, greater productivity and faster innovation.

Don’t wait for the perfect conditions, they’ll never come. Start now, start small, then scale your generative AI applications across the business. Focus on the use cases where you can gain early commercial value – such as customer experience and automating repetitive tasks – and work with technology designed for the enterprise. In a couple of years, you’ll be very glad you did.

Finance

Investing In Bitcoin: What You Need To Understand Before You Buy

Published

20 hours ago

September 25, 2023

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Bitcoin—the digital currency that launched a financial revolution—is more than a trending investment. This decentralized currency, free from traditional banking systems, presents a unique set of opportunities and challenges. It’s crucial for investors to tread carefully, fully grasping the intricacies of this complex yet alluring financial landscape.

The Birth and Evolution of Bitcoin

In 2009, an unknown entity going by the name of Satoshi Nakamoto introduced Bitcoin to the world. Unlike traditional fiat currencies, Bitcoin is a digital currency that operates without a central bank. Transactions are verified by network nodes and recorded on a public ledger known as the blockchain. Over the past decade, Bitcoin’s value has fluctuated wildly, reflecting the market’s ebbs and flows, as well as its adoption into mainstream finance.

Developers continually adapt and modify the Bitcoin codebase, making it more robust and secure. However, being open-source also makes Bitcoin susceptible to scrutiny, potential regulation, and even forks—events that create new, separate cryptocurrencies. An understanding of Bitcoin’s origins and technical underpinnings can give investors a more profound comprehension of its true value and potential drawbacks.

Keeping Tabs on Market Conditions

Cryptocurrency markets are notoriously volatile, and Bitcoin is no exception. Prices can swing dramatically within short periods, influenced by market sentiment, macroeconomic factors, and regulatory changes. Seasoned traders often use technical analysis, charting historical price movements to predict future trends.

To stay updated on market trends, many investors turn to a reliable crypto and bitcoin news site like News BTC. This source provides up-to-date information that can be vital for making informed investment decisions. Additionally, the burgeoning field of crypto analytics offers tools and platforms that provide deep insights into market behavior, helping you decipher the market’s seemingly random oscillations.

Understanding the Risks

Risk management is at the heart of any investment strategy, but with Bitcoin, the rules are still being written. The cryptocurrency landscape is rife with tales of lost fortunes due to forgotten passwords, hacks, and market crashes. Security is paramount; using hardware wallets, two-factor authentication, and keeping backup phrases secure can go a long way in safeguarding your investment.

But risk extends beyond security. Regulation is a looming specter in the crypto world, and government actions can have immediate and dramatic effects on Bitcoin’s price. For example, when China banned financial institutions from offering Bitcoin-related services, the market reacted with a swift and significant downturn. A nuanced approach to these risks can make the difference between capital preservation and costly mistakes.

Diversification and Investment Strategies

Adhering to an investment strategy can also help manage risks effectively. Whether you choose to day trade or hold long-term, having a disciplined approach is essential. Strategies like dollar-cost averaging, where investments are made at regular intervals regardless of price, can help mitigate the impact of volatility and lower the average cost of your Bitcoin holdings over time.

Tax Implications and Record-Keeping

While it’s easy to get caught up in the allure of high returns, it’s essential to understand the tax implications of your Bitcoin investments. In many jurisdictions, cryptocurrencies are considered property, not currency, and are therefore subject to capital gains tax. Investors must keep meticulous records of all transactions, as well-rounded documentation will simplify tax reporting and potentially save you from penalties.

Professional advice from tax experts familiar with cryptocurrency regulations can provide invaluable insights. Also, various software tools are available to help track your transactions and calculate potential tax obligations. Ignorance is not a defense in the eyes of tax authorities, making it crucial to stay informed and prepared.

The Takeaway

Bitcoin investment is not for the faint of heart. From understanding its complex technical foundations to keeping tabs on market conditions and managing risks effectively, the arena demands a well-rounded, educated approach. With potential for high rewards but equally high risks, Bitcoin requires investors to be vigilant, diversified, and ever-adaptive. As the world of finance continues to evolve at a breakneck speed, it’s those who invest the time to understand this dynamic landscape that will likely reap the most significant benefits.