Regardless of any other factors, cybersecurity is an absolute priority for the fintech industry and is becoming a key factor determining the growth of the market. Well established financial institutions have started to invest billions of dollars into new technologies to strengthen their security measures and to increase the awareness of the importance to embrace digital transformation. However, cybersecurity is still considered an issue when it comes to technology innovation and collaboration with fintech firms as threats are developing at the same pace as technology is.
According to the study conducted by the law firm, which surveyed about 200 financial institutions, there is a very high level of insecurity among financial institutions over how innovative they are. Despite the majority of the companies surveyed see a clear opportunity to improve that by partnering with external partners, only 16% saw their current work with fintech companies to be highly efficient. Cybersecurity resulted in being the biggest barrier to make this collaboration successful.
But it’s not just about being more innovative. With phishing, DDoS attacks and other common forms of cyber terrorism as well as with an increased use of the cloud to store data, financial institutions are now required to invest more in ensuring general data security. According to the Global State of Information Security (GSIS) Survey by PwC, 51% of US financial services providers surveyed said that they utilize managed security services for solutions like authentication, analytics, and real-time monitoring. “Cyber expectations are growing. Firms need to balance rapid innovation with the need to provide both seamless customer service and privacy protection,” said Joseph Nocera Financial Services Cybersecurity Leader at PwC.
With cyber attacks costing global businesses an estimated $500 billion per year, it’s something that finance companies should take very seriously. Banks now spend three times more than non-financial organizations on secure IT solutions, with J.P. Morgan, Bank of America, Citibank and Wells Fargo spending $1.5 Billion to battle cybercrimes in 2015.
However what now seems evident is that it’s not enough for fintech companies, banks, and non-financial enterprises to invest singularly in increasing security. And even if beneficial, it’s also not sufficient that governments create better legislative frameworks and regulations. What’s needed is that all actors involved try to work together and collaborate. “Enterprises are struggling to keep up with this topic. We’re all in the same boat, and so we don’t have other option but to collaborate,” said David Thodey, chair of CSIRO, the Commonwealth Scientific and Industrial Research Organisation of the Australian government, speaking last year at the National Fintech Cyber Security Summit in Sydney. Thodey said that this is a problem that needs to be addressed for the benefit of the whole fintech industry. Otherwise, companies may have to pay a high price not just at a financial level but also at a reputational one. “Look at what happens when a network goes down: you could lose everything good you’ve done, and if you’re a small startup your reputation is just as important as a big corporation, so this is critical,” he added.
It is easy to agree that there is the whole market that needs to be involved, with an actual cooperation of companies, financial institutions, governments and regulators from around the world, ensuring that the Fintech industry stays on top of the latest threats to guarantee the needed protection for consumers, but also for companies to grow and flourish.