Pressure to close bank branches and digitise all functions means that major financial institutions are putting customer data at risk in order to save money.
A proliferation of digital routes to banking from leading lenders means that hackers have more and more ways in – and banks are upping the pace rather than tacking the issues, according to a damning report in the Financial Times.
The Financial Conduct Authority has warned that one of the UK’s biggest banks has potential loopholes in its security setup that could put millions of customers’ data at risk. Meanwhile, mobile banking apps are soaring in popularity and banks are anxious to meet expectations that traditional payment and banking functions can be completed online, rather than focussing on closing these loopholes first.
“Whether it is external data feeds, customer and staff devices or cloud services, banks find themselves having to adapt to relying on systems that are outside their control,” Nicola Crawford of the Institute of Risk Management told the FT. She pointed out that the security of these digital services are often outside of the banks’ control, relying on customer and employee devices or third party cloud services providers.
It is thought that many of the new challenger banks, some of which have similar back-end systems to their larger competitors but less experience of managing security breaches, may be most at risk.
However, research by the Economist Intelligence Unit and Temenos shows that retail banks are making digitisation a chief priority, out of concern that new technology competitors will render them irrelevant if they fail to keep up. This issue has now surpassed regulation as bankers’ biggest fear, according to the survey.
At a press conference in London last week, Monica Woodley, editorial director for content solutions at EIU, said: “Technology and e-commerce firms are the competitors that banks fear most.” This has risen from 22% of respondents highlighting it last year as a worry, versus 35% this year, she said.
“You also need integration and real-time updating capabilities to offer the best multichannel banking experience and this will become more importance under the pending intra-day reporting requirements,” added Ben Robinson, chief strategy officer at Temenos
Despite the data protection regulation being implemented in 2018, 69% of IT decision makers don’t have the backing of their board to achieve GDPR compliance, according to Calligo.
The majority of the region’s 28 member states report that the situation has worsened over the past year, reports business management consultant Verisk Maplecroft.
Regulators in the UK, the US and Hong Kong instituted proceedings against more than 1,700 individuals last year, or four times the number of cases brought against companies.
The US Commodity Futures Trading Commission approved LedgerX as the first regulated clearing house for derivatives contracts settling in digital currencies.