Tim Dinsmore, Director, Appurity
The financial services industry is stepping up the gears as part of its digital transformation journey. And whilst COVID and the associated pandemic has pushed organisations to embrace cloud services and mobile devices, the finance industry has already witnessed a massive increase in the adoption of mobile apps. Both employees and customers of financial services organisations are using tablets and smartphones more frequently for day-to-day operations and transactions. Most mobile devices can access cloud-based services and infrastructure which has facilitated remote working. And with corporate data now going wherever it’s required, organisations need to embrace modern security technologies and strategies to stay secure, competitive, and relevant on these smart devices.
It’s no exaggeration to say that the finance industry oversees valuable monetary assets and highly sensitive data. That makes financial institutions the perfect target for cybercriminals. To put that into context, IBM’s threat intelligence index placed the financial services sector as the number one target of cyberattacks in 2020 among all industries. So, what’s going on here and what strategies are available to those who operate in the finance industry?
Mobile devices and apps have allowed organisations to increase productivity and engagement across the board. Employees are able to stay connected wherever they are, and customers can access their financial data anytime, anywhere. With more and more users accessing cloud services and infrastructure from mobile devices, cyberattackers are deliberately targeting such devices to increase their odds of finding a vulnerable entry point. It only takes one single successful phishing or mobile ransomware attack for cyber thieves to be able to access all of the sensitive data and financial information we have already mentioned – proprietary market research, client financials, investment strategies etc.
Security teams need visibility of individual devices and the entire fleet while balancing end-user privacy and compliance with security requirements. In this way, you create a healthy balance between security and end-user privacy – essential where organisations enable bring-your-own-device (BYOD) in a highly regulated industry like financial services. In addition to securing employee mobile devices, consumer banks have an opportunity to protect their customer base. These days, a majority of banking customers use mobile devices as the primary way to access their accounts. It is critical that customer mobile devices are safe and secure and protected from the likes of phishing attacks, screen overlays and trojanised apps – all aiming to steal login credentials. And it is true that employees and customers can be as productive using smartphones or tablets as they are using desktop or laptop computers. However, if these mobile endpoints are not properly secured, you get the same security gaps as with users who don’t employ endpoint security on a laptop or desktop computer. All of this puts your organisation’s security architecture and compliance posture at risk.
Is Mobile Device Management (MDM) the solution?
At the end of the day, both managed and unmanaged mobile devices are at risk – but there has certainly been an increase in the percentage of managed devices in the financial services industry’s mobile fleets. But whilst deploying an MDM solution to try to implement basic controls over apps and devices outside the perimeter is a good start, it doesn’t provide security against mobile cyberthreats. This is especially true when it comes to protecting against phishing attacks. An MDM solution merely enables your administrators to set app and access policies. They do not provide the visibility necessary to monitor the risks that occur when employees are using apps and networks that you don’t control. Not the best scenario when you are trying to visualise the risks your organisation faces.
Many financial services providers have turned to managing devices to mitigate the risks associated with working from smartphones and tablets. And whilst this is a good first step, MDM still leaves employees exposed to more complex phishing, app and device threats that could compromise an entire organisation. The industry must also consider its customers, who prefer the mobile experience and inherently trust their financial services apps to be secure. While some mobile banking apps might implement security techniques into their app, such as app hardening to protect it from being reverse engineered, this isn’t enough to protect customers from threats like trojans and screen overlays.
Comprehensive Endpoint Security is Smarter
With mobile as the main driver for digital transformation, security and IT teams need to work together to secure all smartphones and tablets – whether they’re managed / unmanaged or a consumer device. Doing so with end-user privacy in mind will enable financial organisations to build a stronger security posture without violating corporate and international data privacy and compliance laws. Protecting these modern endpoints requires a different approach – one that is built from the ground up for mobile devices and secures the entire data path from the endpoint to the cloud. Only a modern endpoint protection solution can detect mobile threats in apps, device operating systems and network connections while also protecting against credential theft and malware delivery attacks through phishing.
As a financial organisation, you need to embrace modern security technologies and strategies to stay secure, competitive and relevant on the devices that your employees and customers use the most. With financial services seeing the largest rise in mobile phishing attacks out of any industry, it is clear that you need to think carefully about mobile security. MDM solutions are a start but investing in a comprehensive endpoint security solution provides more robust protection overall.
WHY THE EXPLOSION IN LOCAL RETAIL DEMANDS NEW PAYMENT METHODS
Kasper Enggaard Krog, CEO at mobile payment and business technology firm, Vibrant, explains why micro businesses are being badly let down by contactless payment providers while local retail has boomed.
Before the pandemic, between 40[i] and 47[ii] per cent of micro businesses didn’t accept card payments, depending which statistics you prefer. This includes everything from corner shops to cafes and builders to barbers. They relied on cash, cheque, or where suitable, perhaps the laborious process of an invoice and bank transfer.
This is despite there being 6 billion contactless cards in the world and 47 per cent of people preferring to pay with one when at a physical point of sale[iii]. At first glance, it might seem that these small traders were cutting their noses off to spite their faces. Customers wanted to pay them with cards, why wouldn’t they just allow them to do so?
What was stopping merchants?
The answer is simple. Because for the smallest of merchants, accepting a card payment has always led to expensive ongoing fees, results in slow settlements, requires admin and calls for an up-front investment in cumbersome and basic technology.
It won’t be news to anyone in the industry that the recurring costs all add up. Transaction fees are typically between 1 per cent and 3 per cent, not to mention authorisation fees and merchant service charges[iv]. A credit card reader might be about £20 and the same for a receipt printer. This all eats into profit, not to mention time.
The pandemic changed it all
Yet the pandemic has forced micro businesses to reassess their reticence to take card payments. Two reasons are behind this. Firstly, there has been an explosion in people shopping where they live. When lockdowns swept across Europe, it became hard to get to larger retailers. Local merchants of all sorts became a lifeline[v].
Not only that, but many people were forced to reconnect to their communities and realised they enjoyed shopping on their street and wanted to support independent businesses. The data proves this. According to research, the convenience store sector grew by 6 per cent in 2020[vi].
This led to the second factor, contactless payments were considered safer than handling cards or cash. The overall impact of more shoppers and the threat of infection led to a boom in contactless payments. In fact, the number of purchases made in May 2021 via contactless technology doubled compared with the same month a year earlier and was up 50 per cent on May 2019[vii].
This shift to accepting card payments among the smallest of businesses should be applauded. There are currently £2.25 trillion in cash and cheque payments made in Europe[viii]. They’re now opening themselves up to this huge market.
This is undoubtedly good for consumers and merchants alike. But it does beg the question, why did it take a pandemic to cause the change? Why did they have to face the prospect of potential infection or financial ruin to make the move?
Simple, the existing model is broken. The barriers to accepting card payments remain – high cost, poor tech and slow settlements – but they’ve been overcome through necessity rather than benefit. These businesses remain woefully underserved yet have been forced to accept what is on offer. There must be another way.
And there is. For the first time, the technology now exists for market traders, stall holders, car washes – any number of micro businesses – to take contactless payments using only their phone. No additional tech. No annoying dongles or readers that take up space and will ultimately add to the vast rubbish bin of obsolete, single-function peripheries. These will soon join calculators, MP3 players and digital cameras.
Furthermore, this tech not only takes payments, but within months is expected to allow merchants to run their whole business on their phone. They will be able to add product lists, inventory details, accounting tools and much more. It’s like a mini enterprise resource management system for the tiniest of firms. And the fees are transparent, predictable, lower than the market rate and don’t have binding contracts. Importantly, it also has the backing of Visa – and Vibrant is leading the roll-out.
The business is proud to do so and sees a huge opportunity. Micro businesses are now worth £1.85 trillion to the European economy[ix]. Their importance will grow, and they need the payments sector to take note of their needs and do better. It’s no longer acceptable to foist poor products and services upon them and allow the pandemic to drive change rather than innovation.
The explosion in local retail demands new payment methods – and they must be made available. In many ways, it’s a scandal that it took a pandemic to force change.
[ii] Visa data
[viii] Visa data
[ix] Visa data
IS SCARCITY OF TALENT THREATENING THE UK’S FINTECH CROWN?
Opinion From Rafa Plantier, Head of UK and Ireland at Tink
From the Square Mile to Canary Wharf, London has been the historic centre of global finance, with long-established trading exchanges and trusted financial institutions. In the digital era, it has also ensured that it’s moved with the times to become a thriving hub for fintech.
But the UK financial services sector is now at an inflection point. In the past year, London’s position as a global fintech leader has been under threat. Earlier this year, Amsterdam overtook The City as the largest European share trading hub. The European Banking Authority moved from London to Paris. And Dublin, Paris and Frankfurt are all competing to win a greater share of the European financial marketplace.
The culprits of the shift are the twin challenges of the pandemic and Brexit, combined with the speed of technological transformation in financial services – disrupting the traditional flow of people, capital and ideas. So the pressing question for the industry is: how do we maintain and, more importantly, accelerate momentum to retain London’s fintech crown?
The answer revolves around one key thing — people.
Diverse talent drives innovation
Attracting the best talent is crucial if the UK financial services sector is going to continue to thrive and retain its global position as the preeminent financial centre.
In February 2021, the Kalifa Review laid out a strategy and delivery model for the UK to lead the fintech revolution, covering five key areas. These included skills and talent, investment and international attractiveness and competitiveness. But what became clear was that access to the right level of highly skilled talent was one of the biggest challenges for UK fintech, with barriers spanning both domestic skills shortages and the need to access foreign talent seamlessly.
As a native Brazilian in the UK, working for a Swedish-owned fintech, I understand these challenges as well as anyone. I love London, but we must recognise that fintech firms need unique talent and skills, and such a talent base can’t be met by a single city – not even one as resourceful as London. Not only do fintechs require technology and data specialists, but also experienced managers with good knowledge of high-growth companies and financial services.
As someone lucky enough to have worked with startup and scale-up fintechs across the world, I understand the unique grounding that comes from being a part of a high-growth global company. That’s why I believe it’s vital that we attract people from across the world with commercial experience at ambitious, rapid-growth businesses — so they can bring this experience to bear on the UK financial services sector.
At the same time, many companies face renewed pressure to create new services and products to meet expectations for growth. That is why it’s critical that the UK has access to people with the right technical skills in areas such as software engineering, DevOps, Cybersecurity and data science.
Put simply, having the smartest minds delivering the best products is good for everyone. It drives efficiency, productivity, growth and, ultimately, prosperity.
The UK is open for fintech
The UK should be proud of being a fintech pioneer and the driving force behind legislation that helped usher in the era of open banking. There is now an exciting opportunity to take this even further. Having access to a diverse pool of talent and skills will empower the financial services industry to create innovative products to tackle complex social challenges, such as better B2B payments, financial inclusion and climate change.
The good news is that the UK government clearly recognises the role the industry has to play in driving growth and innovation. The 2021 Autumn Budget reaffirmed commitments to reskill the nation. With £3.8bn budgeted for skills and a formal criteria for the long-awaited Scale Up Visa, the Chancellor announced a set of proposals that will support the breadth of our sector — from startups right through to unicorns and incumbent banks. This will be essential for fintechs like ours to continue to trailblaze and for the UK to differentiate itself on the global stage.
In an increasingly competitive global landscape, and to sustain momentum, we must keep talent avenues open to attract the best of the best in the industry. As one of the fastest-growing areas of the UK economy, the benefits of nurturing UK fintech to drive productivity, growth and lead the UK’s post-pandemic recovery, cannot be overstated. 2021 has seen a surge of activity in the industry and I am eager to see what London’s fintech sector can achieve in 2022.
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