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Cybersecurity - A strategic strength for truly digital banks

Posted by Rajashekara V. Maiya (View Profile | View All Posts) at 7:59 AM

Cybersecurity threats are the unpleasant consequence of increasing digitization. The more connected the world becomes, the more points of entry there are for cybercriminals. Over the past few years there have been many disconcerting revelations of billions of dollars being skimmed off some of the largest financial institutions in the world. There have also been a series of extremely critical data breaches at some of the most technologically savvy banks.

As banking ecosystems expand to incorporate more partners and services and as the number of digital touchpoints proliferate, the threat landscape for digital banking will only broaden. As security increasingly becomes top of mind for digital banking customers, a bank's digital security credentials will become an important component of customer trust as well as competitive differentiation. In fact, credit ratings agency Standard & Poor is already considering the possibility of downgrading banks that are weak on cybersecurity.

The biggest challenge for banks will be to deploy robust threat protection technologies and strategies without compromising customers' digital banking experience. This means that the industry will have to focus on innovation to achieve the right balance between the two. Many banks are already exploring new technologies and possibilities to achieve that balance. Halifax UK, for instance, is experimenting with electronic wristbands that use a customer's unique heart rate to authenticate digital transactions. Barclays is also expected to roll out a voice-biometrics system to its 12 million retail customers that will not only enhance security but also cut identity verification time from 90 seconds to less than 10. In Brazil, Banco Bradesco Cartoes is introducing fingerprint-based biometric authentication at its ATMs. Emerging technologies like Blockchain could also help revolutionize the security of digital transactions.

Even as banks continue to invest in upgrading their security infrastructure, it looks like cybersecurity could become an important component of regulatory oversight. Financial services regulators in New York state, for example, are already working on detailed cybersecurity regulation for banks that mandates policies for vendor management, authentication protocols, third-party security management and breach notifications. Once these guidelines are finalized, they could even be extended to the rest of the United States. So as the pressure mounts from cybercriminals, customers and regulators, banks will have to prioritize security and invest in solutions that detect and prevent attacks before they actually happen.

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