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WHY BANKING IS MORE VULNERABLE THAN EVER – THE CYBER THREATS TO DEFEND AGAINST

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Ian Cole, Global Industry Director, Atos FS&I

 

While banks have always been a prime target for cybercrime, there are two critical reasons why they are more vulnerable than ever before.

Firstly, banks have dramatically accelerated their digital transformations given the need to close their facilities, send their workers home, and move their transactions online as a result of the pandemic. To do so, companies digitized many of their processes and moved parts of their infrastructure to the cloud.

These changes are very unlikely to be reversed. On the contrary, McKinsey argues that financial institutions have the highest chance of maintaining remote and hybrid work models, as three-quarters of their employees’ time can be used productively out of the office.[1] Even more importantly, customers have come to enjoy simple, instant online services, and they will continue to expect abundant digital touchpoints.

Ian Cole

Unfortunately, this permanent transformation has made banks bigger and softer targets for cybercrime. This is because they now operate a massive range of new applications, devices, and infrastructure components — any of which could offer cybercriminals an open door into the company’s network and its data.

This leads to our second point: banks are more appealing targets than ever, and thus they face an increasing volume of attacks.

When banks went all-digital, they began to produce a lot more data than before. They leverage more applications, creating and exchanging data with every interaction — whether a financial operation or a transaction. This data is valuable to cybercriminals. They can sell it, or use it to commit fraud, or threaten to dump it during a ransomware attack.

In summary, banking now faces an increasing tide of vulnerabilities and cyber-attacks due to permanent trends. Therefore, banks must know what threats they now face and use this information to raise effective defences against them.

 

Today’s Threats: What Banks Must Defend Against

Verizon recently released its 2021 Data Breach Investigation Report (DBIR).

In it, they share data on 80,000 security incidents that had been reported over the prior year. They collect this data from 83 contributing security organizations, including Atos. By doing so, a clear picture emerges of what vulnerabilities and attacks are most common in today’s threat landscape.

Here is what the 2021 DBIR teaches us about the threats that banking faces:

Banks are primarily being targeted with phishing, ransomware, and credential-based attacks at a top-level. Additionally, cybercriminals primarily targeted personal data, credentials, and internal banking data. Specifically, criminals on forums were often discussing bank account and credit card-related information.

The DBIR provided additional key findings, including:

  • Phishing increased by 11%
  • Credentials were involved in 61% of breaches
  • Ransomware is up to 10% of all breaches, likely due to new tactics utilized by the attacker

The human element was involved in 85% of all breaches. This includes many actions such as social engineering, malware, misuse, and lost and stolen assets. Web Application Attacks remain as high as they have in previous years.

 

Next Steps: Defending Banking

Banks must find a way to maintain a highly productive remote or hybrid workforce, all while maintaining high defences, protecting their employees’ identities, enforcing access policies, and monitoring and hunting the growing wave of threats that target them.

As the traditional network perimeter continues to change, it is necessary to establish new security boundaries that enforce the security policy at a range of architectural levels, for people and processes, as well as a technical level. It will be necessary to develop plans to adopt a Zero Trust architecture in order to have the assurance that data is only being used by entities deliberately authorized, and that all interactions are properly verified.

 

Why banking is more vulnerable than ever – the cyber threats to defend against article from Atos’ Digital Vision: Digital Banking report.

[1] https://www.mckinsey.com/featured-insights/future-of-work/whats-next-for-remote-work-an-analysis-of-2000-tasks-800-jobs-and-nine-countries

 

Banking

Cloud technology in banking: Why adoption is on the rise

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Alpesh Tailor, Executive Director at digital transformation specialist GFT

 

The banking sector has never shied away from innovation, whether it is new products to improve customer savings habits or new ways of interacting with people and business, but embracing new technologies such as cloud has, until recently, been relatively slow. However, leading global financial institutions such as Goldman Sachs and Deutsche Bank have accelerated their adoption of cloud, which can provide insights for efficient technology transformation across the sector.

We conducted research to measure 21 medium-size and large banks’ sentiment and operations regarding cloud technology. Examining the relationship between cloud technology and banking professionals, our research provides an insight into the overall finance sector’s perception of cloud technology and how its application can improve banking procedures and efficiency.

 

Scale-up abilities

A significant trend showed that the way people use their finances and banking systems has changed, particularly when it comes to payments and transfers. Our research revealed that 86% of bankers have adopted cloud services to harness its virtually unlimited scalability, citing a definitive change in transaction behaviour as the main reason for moving to the cloud.

In the world of retail banking, buy-now-pay-later, open banking, and contactless payment systems have revolutionised the way people use their bank, making financial management easier and more efficient. However, despite these evolutions, high street banks are playing catch-up to the challenger banks who possess fewer legacy processes and, therefore, an easier migration to new technologies, such as the full utilisation of cloud and artificial intelligence.

The cloud provides a dependable, scalable, and flexible data system that allows traditional banks to modernise quickly and stay abreast of the innovations that ‘born-in-the-cloud’ challenger banks are bringing to the market. An increasingly popular way of doing this is by adopting a hybrid and multicloud approach.

Most organisations are considering diversifying their cloud technology, with 76% of bankers now agreeing with the importance of implementing multicloud systems in order to benefit from resilience and security improvements made by the main cloud providers. These cloud ‘hyperscalers’ also provide regular updates and continue to release exclusive new services and platforms as they continue to innovate.

 

Optimising costs

Our research indicates that cost optimisation is a primary reason that banks are looking toward the cloud for their future storage needs, with 81% of bankers confirming they have adopted cloud technology to save costs.

Installing and maintaining on-premise IT systems is lengthy and costly for financial institutions. When using the cloud, however, purchasing and installing hardware is no longer required as the cloud service provider hosts all the required infrastructure. The management of the hardware is included within this, reducing the overall cost of IT support further.

 

 Organisational inertia

Technological innovations are usually heralded for their ability to streamline operations, making them quicker and more secure. Our research illustrates that 62% of bankers believe organisational culture and inertia to be a key challenge within the sector. Besides being flexible for scalability and cost, adopting cloud technology can bolster organisational efficiency, since banks can spend fewer resources managing the relationship between trading volumes and payment infrastructure. Bankers acknowledge this opportunity, with 95% of organisations understanding that cloud technology can reduce time-to-market.

 

Overcoming misconceptions with cloud technology

Misconceptions usually exist around any emerging technology and our research found that this theme continues with cloud technology.

43% of the bankers we spoke to admitted that security concerns have impeded full cloud migration – a concern that has frequently been confirmed when speaking to financial services institutions. However, cloud providers invest heavily in the security of their cloud infrastructure which, as a result, makes it almost always safer than its on-premise, client-owned counterpart.

One aspect of adopting the cloud that continues to cause concern, is that which is commonly termed the ‘digital skills gap’. More than half of banks claim a lack of cloud-savvy employees internally has slowed down adoption. At GFT, we understand that this is a major issue for the adoption of cloud technology in all sectors, including banking, and have committed to training and encouraging young people to learn the required skills and enter the sector. We recently launched our Manchester Innovation Hub – a dedicated location to support the upskilling and growth of tech roles in the north.

Going forwards, cloud technology is the primary option for banks seeking to evolve and scale their business, whilst minimising risk, time and cost. Bankers recognise these benefits and the overall findings of our research suggest they will continue to grow their investment in cloud technology. Whilst evolving traditional legacy systems is very challenging, cloud technology continues to advance and we believe that over time it will become a powerful mainstay within the financial services industry.

 

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Banking

Bringing Automation to Banking

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Ron Benegbi, Founder & CEO, Uplinq Financial Technologies

 

Automation is everywhere you look these days; from supermarkets to warehouses to automobiles. This prominent trend shows no sign of abating anytime soon. However, some sectors remain behind others when it comes to adopting automated technologies. Banking is one such segment, but there’s now evidence to suggest that this could be about to change.

 

What do we mean by automation?

There are a lot of ways to define automation, but broadly the term applies to any technological application where human input is minimized through design. Over the years, automation has evolved from a basic level, which took simple tasks and automated them, all the way to advanced automation powered by Artificial Intelligence (AI). In general, automated solutions work to increase productivity and efficiency within businesses and often result in a reduction in costs associated with human capital.

 

Ron Benegbi

Why has the banking sector been slow to adopt automation?

The banking sector has been built on a number of long-standing, tried and tested processes and protocols, which have been continually fortified and refined over time. This is one explanation as to why the sector has been so slow in adopting new, automated methods within its operations. Additionally, many major financial institutions have spent decades building their own internal legacy computer systems, which are often incompatible with modern automated solutions.

When combined, these two issues have caused a significant lag in the banking sector with regards to the adoption of automated technologies. This lag has created a market opportunity that a number of fintech providers have been able to exploit in recent years. Offering a more responsive and tech-first user experience, many fintech providers are leveraging the power of automation to better meet the banking needs of their customers. However, there is still time for the banking sector to start bridging this gap.

 

Does automation have a place in the banking sector?

The opportunity for automation to play a role within banking can be transformational.

To achieve this, it’s important that legacy organizations begin to learn from their more tech-savvy, smaller counterparts. If used effectively, automated financial solutions can greatly improve the experience of banking customers, both on a personal and business level. So, what exactly does this change look like, and how far away are we from seeing it become a reality?

A good place to start is the small business credit lending process, where not much has changed since the 1980’s. Over that period, the world has greatly transformed, but the methods used to assess credit worthiness have remained somewhat static. For the most part, banks assess data related to businesses’ accounting and banking records and from credit scores. For many businesses, especially the newer and less established ones, this antiquated approach is having a detrimental effect. In fact, it’s often cited as a contributor to the huge funding gap between SMBs and their larger counterparts.

 

How can automation benefit the banking sector?

By adopting more automated technologies, lenders in the banking sector can begin to assess more comprehensive information when making credit decisions. Notably, new methods exist, which enable additional data sets to be evaluated, in order to build a more accurate financial depiction of a business’ overall position. This data can come from sources like external market attributes, economic indicators, demographic data and exogenous shocks.

By leveraging additional data sets through new methods of financial automation, banks are now in a position to respond more effectively to small businesses, including those in emerging and evolving markets where there is a lack of conventional sources of information.

With more ways to access funding, facilitated by alternative data and automated processes, small business owners can improve their operational efficiencies and accelerate their growth efforts. In doing so, legacy oriented financial institutions can now better equip themselves in protecting against new, nimbler tech-based disruptors.

 

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