Cybercrime and fraud continues to threaten financial services industry
21 August 2018 London
Image: Shutterstock
Cybercrime and fraud still one of the leading threats to the financial services industry, according to a new paper released by Finestra in association with Equinix.
In a survey of more than 100 financial services professionals and a series of one-to-one interviews with senior bankers, Finestra found more than half (56 percent) said fighting cybercrime and fraud would be their main priority over the next five years.
Becky Clements, head of payment industry and change at Metro Bank, said: “Cybercrime and fraud pose a real threat to the banking industry. As a non-executive director at New Payment Systems Operator, we have a dedicated team focused on how the industry can work together to help combat cybercrime and protect customers.”
The paper also explores how interconnection and computing at the edge can help banks successfully navigate digital transformation and secure competitive advantage; whatever
the future landscape looks like.
Finestra stated: “Technologies and processes such as 5G, cloud and data analytics are reaching maturity.”
It added: “This is creating myriad opportunities and challenges for banks to respond to and requires agility in development, but also in culture. A mindset of test, deploy and learn-fast is required but it does not sit comfortably with such conservative heritage.”
One survey question looked at the key trends in the competitive landscape that banks expect to face during the next five years. Of this, some 34 percent of respondents said challenger banks and new entrants to the market were their biggest competition and priority.
The report also covered working with third-party providers (TPPs). In the interviews, the priority areas for working with TPPs which emerged were regulation technology and compliance, but with a focus on open application platform interfaces (APIs), as well as know your customer and anti-money laundering services.
Many of those interviewed said the development of new AML products “offers a big market for financial technologies” and also that TPPs can help drive better compliance within banks through, for example, improved management information reports for Market in Financial Instruments Directive.
Finestra was also made aware of the threat posed by continuing levels of regulatory change.
It said: “Particularly to the large banks, increased competition—with technology platforms and single sign-on allowing access to multiple providers—is expected to pose a significant threat to current income levels.”
Although there were no specific questions on APIs in the online survey, the subject was discussed during the interviews
During interviews, the banks were asked whether their approach to open APIs was focused on regulatory compliance or more strategically as a potential enabler of both innovation and competitive advantage.
Commenting on this, Teresa Connors, director of market engagement at the Royal Bank of Scotland Group, said: “Open banking is often discussed in relation to regulatory compliance. But it is much more.”
“The combined effect of open banking and the development of API networks offer opportunities to launch new products and services, increase competition and provide greater choice for customers.”
Finestra said: “What was clear from their responses was that all the banks saw the strategic opportunities offered by open APIs, but some were still concentrating on delivering the mandatory elements, with innovation being for the future.”
In a survey of more than 100 financial services professionals and a series of one-to-one interviews with senior bankers, Finestra found more than half (56 percent) said fighting cybercrime and fraud would be their main priority over the next five years.
Becky Clements, head of payment industry and change at Metro Bank, said: “Cybercrime and fraud pose a real threat to the banking industry. As a non-executive director at New Payment Systems Operator, we have a dedicated team focused on how the industry can work together to help combat cybercrime and protect customers.”
The paper also explores how interconnection and computing at the edge can help banks successfully navigate digital transformation and secure competitive advantage; whatever
the future landscape looks like.
Finestra stated: “Technologies and processes such as 5G, cloud and data analytics are reaching maturity.”
It added: “This is creating myriad opportunities and challenges for banks to respond to and requires agility in development, but also in culture. A mindset of test, deploy and learn-fast is required but it does not sit comfortably with such conservative heritage.”
One survey question looked at the key trends in the competitive landscape that banks expect to face during the next five years. Of this, some 34 percent of respondents said challenger banks and new entrants to the market were their biggest competition and priority.
The report also covered working with third-party providers (TPPs). In the interviews, the priority areas for working with TPPs which emerged were regulation technology and compliance, but with a focus on open application platform interfaces (APIs), as well as know your customer and anti-money laundering services.
Many of those interviewed said the development of new AML products “offers a big market for financial technologies” and also that TPPs can help drive better compliance within banks through, for example, improved management information reports for Market in Financial Instruments Directive.
Finestra was also made aware of the threat posed by continuing levels of regulatory change.
It said: “Particularly to the large banks, increased competition—with technology platforms and single sign-on allowing access to multiple providers—is expected to pose a significant threat to current income levels.”
Although there were no specific questions on APIs in the online survey, the subject was discussed during the interviews
During interviews, the banks were asked whether their approach to open APIs was focused on regulatory compliance or more strategically as a potential enabler of both innovation and competitive advantage.
Commenting on this, Teresa Connors, director of market engagement at the Royal Bank of Scotland Group, said: “Open banking is often discussed in relation to regulatory compliance. But it is much more.”
“The combined effect of open banking and the development of API networks offer opportunities to launch new products and services, increase competition and provide greater choice for customers.”
Finestra said: “What was clear from their responses was that all the banks saw the strategic opportunities offered by open APIs, but some were still concentrating on delivering the mandatory elements, with innovation being for the future.”
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