Industry experts CACI forecast that 2019 could very well see mobiles usurp PCs as the main appliance for internet banking. It’s even predicted that by 2023, 72% of Brits will use apps as their main financial management source.
But mobile banking has already transformed how we spend money. Let’s explore how.
Thanks to banking apps, it’s easier than ever to access money. Access to phone signal granted, you can transfer money, anywhere, at any time. However, with this comes the risk of overspending.
And many people can’t resist the temptation to buy more than they need. In fact, a recent report by Bain & Co. revealed that on average, mobile payment users spend twice as much as those who don’t.
Therefore, what we’re spending money on – as well as how we’re spending it - has already been hugely affected by mobile banking.
Very often, with the risk of overspending comes an increased demand for easy money-saving tactics. Unsurprisingly, banks have been quick to jump on this need by bringing out budgeting apps.
Although increased spending remains common among mobile bankers, these apps could help to provide a remedy. Because managing finances is a priority for most people, they have been quick to take off.
So, mobile banking hasn’t just influenced how we spend — it’s changing how we save, too.
Banking apps make it more straightforward to exchange money and make purchases, therefore they are particularly valuable for people who struggle with traditional methods of money management.
For wheelchair users, visiting a local bank or an ATM can often be inconvenient. But thanks to these apps, financial affairs can be managed from home. The need to venture into town to take out cash or pay for goods is now a thing of the past — and this is transforming lives.
Likewise, this has revolutionised how people with specific learning differences monitor their money. Features like colour-coding are ideal for users with Dyslexia, Dyspraxia and ADHD, for example.
For people who live far from the town or city, driving to an area with a hole in the wall or bank is no longer necessary as banking can be done from home. Using this kind of app could even reduce your carbon emissions.
Mobile banking isn’t just benefitting its users — it’s helping the environment.
How we spend, save and manage our money has been completely transformed by mobile banking. No wonder its set to rise in popularity over the next four years. This is an exciting time for the financial world. How will it affect your finances?
Unfortunately, by prioritising ad-hoc incident resolution, organisations struggle to identify and address recurring data quality problems in a structural manner. So what is the correct approach? Boyke Baboelal, Strategic Solutions Director of Americas at Asset Control, answers the question for Finance Monthly.
To rectify the above issue, organisations must carry out more continuous analysis, targeted at understanding their data quality and reporting on it over time. Not many are doing this and that’s a problem. After all, if firms fail to track what was done historically, they will not know how often specific data items contained completeness or accuracy issues, nor how often mistakes are made, or how frequently quick bulk validations replace more thorough analysis.
To address this, organisations need to put in place a data quality framework. Indeed, the latest regulations and guidelines increasingly require them to establish and implement this.
That means identifying what the critical data elements are, what the risks and likely errors or gaps in that data are, and what data flows and controls are in place. By using such a framework, organisations can outline a policy that establishes a clear definition of data quality and its objectives and that documents the data governance approach, including processes and procedures; responsibilities and data ownership.
The framework will also help organisations establish the dimensions of data quality: that data should be accurate, complete, timely and appropriate, for instance. For all these areas, key performance indicators (KPIs) need to be implemented to enable the organisation to measure what data quality means, while risk indicators (KRIs) need to be implemented and monitored to ensure the organisation knows where its risks are and that it has effective controls to deal with them.
A data quality framework will inevitably be focused on the operational aspects of an organisation’s data quality efforts. To take data quality up a further level though, businesses can employ a data quality intelligence approach which enables them to achieve a much broader level of insight, analysis, reporting and alerts.
This will in turn allow the organisation to capture and store historical information about data quality, including how often an item was modified and how often data was erroneously flagged. More broadly, it will enable organisations to achieve critical analysis capabilities for these exceptions and any data issues arising, in addition to analysis capabilities for testing the effectiveness of key data controls and reporting capabilities for data quality KPIs, vendor and internal data source performance, control effectiveness and SLAs.
In short, data quality intelligence effectively forms a further layer on top of the operational data quality functionality provided by the framework, which helps to visualise what it has achieved, making sure that all data controls are effective, and that the organisation is achieving its KPIs and KRIs. Rather than being an operational tool, it is effectively a business intelligence solution, providing key insight into how the organisation is performing against its key data quality goals and targets. CEOs and chief risk officers (CROs) would potentially benefit from this functionality as would compliance and operational risk departments.
While the data quality framework helps deliver the operational aspects of an organisation’s data quality efforts, data quality intelligence gives key decision-makers and other stakeholders an insight into that approach, helping them measure its success and demonstrate the organisation is compliant with its own data quality policies and relevant industry regulations.
The financial services industry is starting to focus more on data quality. In Experian’s 2018 global data management benchmark report, 74% of financial institutions surveyed said they believed that data quality issues impact customer trust and perception and 86% saw data as an integral part of forming a business strategy.
Data quality matters. As Paul Malyon, Experian Data Quality’s Data Strategy Manager, puts it: “Simply put, if you capture poor quality data you will see poor quality results. Customer service, marketing and ultimately the bottom line will suffer.”
In financial services with its significant regulatory burden, the consequences of poor data quality are even more severe. And so, it is a timely moment for the rollout of the multi-layered approach outlined above, which brings a range of benefits, helping firms demonstrate the accuracy, completeness and timeliness of their data, which in turn helps them meet relevant regulatory requirements, and assess compliance with their own data quality objectives. There has never been a better time for financial services organisations to take the plunge and start getting their data quality processes up to scratch.
Two-thirds (66%) of UK consumers do not want to use a smartwatch app to make payments or purchase goods. That’s according to new State of Finance research from experience management company, Qualtrics, which examines financial technologies and payment preferences across the UK.
The finance-focused research, which surveyed over 1,000 UK consumers, also found that 81% of those questioned say that they have never used a smartwatch to pay for items.
Although the debit card has overtaken cash as the preferred form of payment, the research found that 97% of consumers still use cash at least some of the time. Surprisingly, over a third (36%) are still paying with cheques — almost double those who use wearables.
Commenting on these findings, Luke Williams, CX strategy lead at Qualtrics, said: “While it’s great to see both retailers and financial institutions investing in new and innovative forms of payment, it appears that consumers are not yet ready to transition away from cards and cash.
“Financial institutions need to think carefully about what payment approaches work for their customers and the technologies that will meet consumer demands. There is no substitute for offering experiences that consumers want to engage with, and payments are no different. The key is not imposing technologies that you think consumers should use, but listening to customers and tailoring your approach to their individual needs.”
(Source: Qualtrics)
This week Finance Monthly hears from Mohit Manchanda, Head of F&A and Consulting EXL Service UK/Europe at EXL, on the ever-evolving DNA of a CFO.
Business leaders have to stay relevant and ahead of the curve and adapt to the constantly evolving world of finance. This development has become ever apparent for the Chief Financial Officer (CFO) whose role now includes, strategies, operations, communication, and leadership as well as building knowledge surrounding the impact of emerging technologies within the finance sector.
Advances in data software and automation are opening up avenues for businesses to generate valuable insights that can lead to major productivity improvements. Within the finance and accounting areas, technology is becoming a catalyst for change, driving innovation and providing operational efficiency in business-critical functions.[1] It is essential for CFOs to rethink how to utilise this opportunity to streamline their processes for efficiency, compliance and risk management.
CFOs have many objectives to commit to and by using cutting-edge solutions to enhance the transparency and accuracy of financial data, they can better manage the financial management process. Using automation within finance helps to free up high-value tasks and alleviates the pressure on the CFO to perform traditional activities such as, transaction processing, auditing and compliance.
It is becoming more and more evident that the CFO will be looked up to, to drive the utilisation of new technologies, however they should try not to get ahead of themselves and forget about the day to day business. Becoming too attached to the hype surrounding Automation and Analytics can put other business objectives on the back burner. For example, managing costs and coming up with new ways to generate profit are tasks that require the CFO to use their own industry knowledge rather than relying on data or analytics.
New technologies can speed up processes and lessen tasks for CFOs; it is important for them to make choices and identify processes where AI, Automation and machine Learning adds value. An investment in one area of a business can create savings in another. In most companies, a high percentage of staff still perform tasks that can be automated through Machine Learning, and these tasks can be performed exponentially faster if self-learning algorithms are applied.
Given the pace of technological change, CFOs should carefully evaluate their point of entry and roll out multiple pilots or proofs of concept (PoC) to test and secure validation before deploying these new technologies.
New technologies can speed up processes and lessen tasks for CFOs; it is important for them to make choices and identify processes where AI, Automation and machine Learning adds value.
Introducing innovative technologies within the finance sector does aid in mitigating lesser tasks for the CFO, however it is not only the technology alone that enables a more streamlined work process. By combining talent, skill set and technology together creates a unified approach, resulting in major improvements throughout the business. For CFOs it means that they can move away from everyday traditional accounting tasks, therefore freeing up time to use their industry knowledge to focus on new business opportunities and provide strategic guidance.
Organisations regardless of their size will collect large masses of data of which most will never be utilised. It is important for CFOs to understand which data sets are of value and which ones aren’t. Some may be needed for regulatory purposes and others for commercial predictions and products, however by disregarding the sets that are not of value helps to create a more streamlined result.
Starting to experiment with data will help identify potential risks before they are put into production. Machine Learning is all about data experimentation, hypothesis testing, fine tuning data models and Automation. Bringing data, technology and talent together in the form of ideation forums, innovation labs and skunk work projects allows discrete data to be tested for the first time. By bringing in Machine Learning, it can identify hidden patterns that could potentially harm the production process.
In order to drive the business forward, CFOs can translate data and combine it with industry knowledge. The data helps to provide insight within the industry which then contextualises their business decisions. Using data driven decisions CFOs can be confident in their choices within the organisation and use it to back up or prove their conclusions.
Putting data under the business lens enables a CFO to understand the repercussions that can occur through the improper use of big data. A business’ reputation is on the line if data violations occur. Not only will this result in legal sanctions, it will limit business operations, which will have a domino effect on resources and a company’s position compared to its competitors.
Therefore, CFOs should review all of the potential consequences before putting their experimented data findings into practice, including any legal, financial, and brand implications. This is where industry knowledge comes into play, using an expert committee on business data to inspect algorithms for unintentional consequences, results in less risk than normally associated with Machine Learning.
For CFOs to thrive in the digital age, it is essential for them to have a unified approach combining industry knowledge, data, technology and talent.
For CFOs to thrive in the digital age, it is essential for them to have a unified approach combining industry knowledge, data, technology and talent. By employing new technologies, data, talent and knowledge as one package, CFOs can add continuous learning opportunities for critical talent pools, and assist in the overall improvement of productivity within the business.
[1] https://www.business2community.com/big-data/17-statistics-showcasing-role-data-digital-transformation-01970571
Below Russell Bennett, Chief Technology Officer at Fraedom, discusses the future prospects for AI in the banking sector, and what 2019 may hold.
AI is incredibly complex and doesn’t represent a single technology. Rather, it’s a multidimensional field encompassing a range of different technologies and methods, each supporting and supported by the others[1]. The technology’s pace of evolution has grown exponentially in recent years and if AI’s benefits and limitations are understood, it’s believed this technology will have a tremendous impact on the banking industry in 2019.
With so much potential ready to be unleashed, where exactly will we see AI’s influence in the banking sector in 2019?
Chatbots and Virtual Assistants
While chatbots have been used by financial institutions for several years, thanks to advances in AI their capabilities have continued to grow. Whereas they were once only used to answer generic FAQs, for example, most chatbots are now capable of initiating and performing tasks on their own. Thanks to these developments, Juniper estimates that the introduction of chatbots and virtual assistants will save companies $8 billion per year by 2022[2]. This is set to be only one of the benefits to banks with Gartner suggesting that by 2020 consumers will manage 85% of their total business interactions with banks through fintech chatbots[3].
Juniper estimates that the introduction of chatbots and virtual assistants will save companies $8 billion per year by 2022
While this could be a source of worry for the banking workforce, in reality, there should be little concern. Rather than acting as a replacement for employees, banks instead seem to be looking at AI as a tool to help release pressure points and empower the workforce with Accenture even predicting that banks that deploy AI wisely will see a 14% increase in jobs[4].
In 2016, Santander became the first UK bank to launch voice banking technology[5]. Of course, since then a large variety of global banks have adopted this technology in one way or another, suggesting that banks are looking at utilising AI beyond chatbots. In fact, with Mariano Belinsky, managing partner of Santander InnoVenture, discussing natural language processing[6], it seems to only be a matter of time before virtual assistants come into use.
Driving Customer Insights
Last year, we saw a clear disconnect between banks and their smaller customers. In these situations, intelligent automation could well be the answer to support businesses and provide a better service as well as working seamlessly with third parties and fintechs, rather than against them.
In our recent study of SMEs in the UK and US, we found that less than 20% of SME owners thought that banks they had dealt with over the past year fully understood their needs as a business, demonstrating a clear lack of engagement. In 2019, using automated data collection on an ongoing basis, behind the scenes, can ultimately ensure bank relationship managers are better equipped with in-depth knowledge about their customers; hence best positioned to support their business and provide a better service.
Less than 20% of SME owners thought that banks they had dealt with over the past year fully understood their needs as a business.
Security and Compliance
One of the key differences between AI applications and other, more traditional technological solutions, lies in AI’s ability to continuously learn from the data it is supplied with, hence refining its decision-making processes over time.
Cybersecurity is a current hot topic for the financial services sector and regulatory compliance is another. AI can add real value in both of these areas. Machine Learning platforms can be coded to identify user patterns and detect anomalous network behaviour, something that’s increasingly essential as cyber-attacks are often disguised with inconspicuous data or code.
In recent years, technology has been a disruptor and an innovator. Technology is increasingly helping shape customers’ wants, needs and expectations. With a raft of new regulation encouraging the use of technology in banking, there’s nowhere left for anyone to hide. The technology revolution is in full swing and for banks, it’s very much adapt or die.
In the very near future, it is likely that AI will completely
revolutionise banking. It will redefine how banks operate, what innovative
products and services they create and how they evolve the customer
relationship. Banks must, therefore, embrace this new technology or risk of
falling behind in an extremely competitive environment.
[1] https://www.accenture.com/t00010101T000000Z__w__/gb-en/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Local/en-gb/PDF_3/Accenture-Redefining-Capital-Markets-with-Artificial-Intelligence-UKI.pdf
[2] https://www.juniperresearch.com/press/press-releases/chatbots-a-game-changer-for-banking-healthcare
[3] https://www.gartner.com/imagesrv/summits/docs/na/customer-360/C360_2011_brochure_FINAL.pdf
[4] https://www.accenture.com/gb-en/insights/banking/future-workforce-banking-survey
[5] https://www.santander.co.uk/uk/infodetail?p_p_id=W000_hidden_WAR_W000_hiddenportlet&p_p_lifecycle=1&p_p_state=normal&p_p_mode=view&p_p_col_id=column-2&p_p_col_pos=1&p_p_col_count=3&_W000_hidden_WAR_W000_hiddenportlet_javax.portlet.action=hiddenAction&_W000_hidden_WAR_W000_hiddenportlet_base.portlet.view=ILBDInitialView&_W000_hidden_WAR_W000_hiddenportlet_cid=1324582275873&_W000_hidden_WAR_W000_hiddenportlet_tipo=SANContent
[6] https://www.americanbanker.com/news/what-santanders-latest-bets-say-about-the-future-of-fintech
Fortunately, Viktoria Ruubel, Chief Product Officer at IPF Digital, is here to help you stay ahead of the curve, looking forward to 2019 and the top trends that will dominate the industry over the coming year.
Mobile banking has been around for barely five years, but now it is ubiquitous. In the next five years, 72% of the UK population is expected to be banking via their phones. Paper money is dated – new transactional experiences define our daily spending, with contactless cards sharing a crowded market with mobile tech like tap-and-pay.
2018 saw millennials flocking to digital wallet providers like Monzo and Revolut. In 2019, this sort of tech will go mainstream, with a wider range of providers and services, all targeting improved customer experience, financial inclusion, and digital service.
The global payments industry processed over $1bn per day in 2017. In Latin America, and Sub-Saharan Africa, where traditional institutions shied away from investing, fintech firms have plugged the gap in the market.
The restrictions enforced by old-fashioned lenders have catalyzed the development of mobile banking. Mobile payments enabled by technology grant financial inclusion to users who wouldn’t meet the criteria for traditional banks
Smartphone adoption lies behind the accessibility of mobile banking – with a smartphone and internet access you can be part of the financial system without a bank account. More people than ever can contribute to the movement of money around the world, resulting in more opportunities for individuals to improve their financial situations, and for business to leverage credit for growth.
In 2019, fintech companies will recognize the massive markets that await outside of the traditional financial ecosystem.
Open Banking has won over its early sceptics and now has a strong place in the market, driven by the adoption of PSD2 regulation, new strategic partnerships, and increased customer expectations. 2019 will see open API reach maturity, with new products, customer experiences, business models, and opportunities created along the way.
Stripe, Mint, N26 – these are just some of the players using open API to offer products to both banked and unbanked segments. Meanwhile companies like Alipay and WeChat are building exciting new infrastructure which could drive the financial services revolution globally.
The rapid advances in AI-enabled customer intelligence will drive the great leap forward in the 2019 financial industry, notably consumer lending. Chatbots and virtual assistants grew in popularity over the last two years, and consumers are increasingly comfortable using them to request information. Advances in voice tech mean that virtual assistants could soon submit loan applications on your behalf with a vocal signature.
Meanwhile, digital devices and pay for each other, to each other. Lending will become ‘real-time’ and AI learning will allow credit products to be personalized to each customer’s behavior.
For example, AI technology could analyse customer spending, and then suggest saving plans, helping consumers budget and borrow more sustainably. AI would then remind customers when they might need to borrow, how much to borrow and the schedule they should follow for repayments.
In developed global markets with high levels of smartphone use, biometrics are the next big step for financial services, in 2019 and the medium term as well. Biometrics will soon be integral to verification processes and payments - mobile banking apps already allow users to log in and pay with facial recognition, voice recognition and fingerprints.
The more financial institutions rely on digital, the more data security becomes a concern. Biometric technology one solution, maintaining the transactional security crucial to any sound financial environment.
In fact, according to a Capgemini report, digital laggards in the financial services industry are in danger of losing up to 35% of their total market share to digital pure-plays. So, from upgrading ATMs to give them iPad-esq interfaces, to making mortgage applications possible from a smartphone, we have seen a mass of new innovations from the traditional banks this year.
But this hasn’t been an easy process. While some financial institutions have been slow to adapt, others have attempted such a myriad of new innovations that they’ve been at risk of trying to achieve too much change at once. Below Matt Phillips, VP, Head of Financial Services, Diebold Nixdorf UK/I, provides several reasons 2019 is set to be the year financial institutions focus on what really matters.
In 2019 we’ll see a new approach. This will be the year when financial institutions hone their technological direction. Many will pick one key area to focus on, and they’ll do it really well. Here’s a look at why, and what else is in store for the industry in 2019…
Below Finance Monthly hears from Ronnie D’Arienzo, Chief Sales Officer at PPRO Group, on his top tech predictions in payments for 2019.
Generation Z (those born between 1996 and 2010) are arguably having the biggest influence on societal trends today. For instance, most of those classed as Generation Y can remember the days of dial-up internet and landlines, as the World Wide Web wasn’t invented until 1990. This generation was born and lived at least a few years of their lives outside of the always-on, constantly connected, mobile-driven world that we know today. However, Generation Z has been born into the era of the internet and mobile devices, and don’t know life any other way.
The oldest of this generation has now begun to enter employment and has the spending power which means their demands have quickly driven societal expectations with regards to how mobile technology should be recognised at virtually every consumer touch point – particularly within the retail and banking sectors. In fact, within the next four years, Gen Z will account for 40 percent of all consumers, and their expectations for fast, seamless and secure retail and banking experiences will be higher than ever.
Without a doubt, having a mobile first solution will be even more critical in 2019 should both the physical and online retailers and banking institutions want to survive on the torturous British highstreets. WompMobile, in collaboration with Google, analysed their eCommerce clients and found that those which used Accelerated Mobile Pages (AMP) increased conversion rates by 105%, decreased bounce rates by 31% and increased click-through rate from search engines by 29%[1].
Visa and Mastercard account for only 23% of global eCommerce today; by 2021 that number will be as low as 15%[2]. This is driven by merchants realising that in order to reach a broader global consumer market, they need to offer the payment method of their customers’ choice. Unlike the US and the UK, for example, where a strong and established card acquiring model exists, many markets prefer ‘alternative methods of payment’ (often this is culturally driven).
Card centric cultures, such as the UK, that heavily depends on debit and credit payment cards, seeing alternative payment methods enter the market, such as PaybyBank app, Venom and Klarna etc. It is also worth noting that in China UnionPay (local credit card) recently overtook Visa as the world’s largest form of card payments by transaction value and number of users. Even ApplePay is entering into the non-debt, cash based German market.
The list is almost endless as there are approximately 350 relevant APMs worldwide, but it is key that the merchant chooses only what is needed for them and ensures checkout pages are relevant and not cluttered. 2018 has seen many Payment Service Providers (PSPs) and Acquiring Banks recognise this and begin to add APMs to their portfolio for merchants. However, if merchants don’t address cultural payment differences with the help of their PSPs, 2019 will see them miss out more than ever. Consumers don’t take any hostages and if you can’t give them what they want, they will quickly go to a competitor who can.
There is much hype over brick-and-mortar stores becoming a thing of the past. However, with consumers craving something tangible, I predict that in 2019 we will see the online shopping phenomenon begin to penetrate physical stores.
For some consumers, nothing e-commerce has to offer can quite measure up to the physical in-store experience. High street outlets are also recognising that creating a social and omni-channel experience is key to bringing footfall back.
In fact, leading global retailers like Amazon and Alibaba are now experimenting with the newly revived power of hands-on shopping. For example, Amazon recently opened a store in New York offering a range of bestselling items and additional items that were chosen to directly reflect consumer buying behaviours in the region. The concept store is set to turn traditional shopping on its head by replicating the virtual within the physical. Copying the structure of the Amazon website, the store has products organised by headings already known to online shoppers such as "Trending Around NYC", "Frequently Bought Together" and "Amazon Exclusives."
Alibaba Group also seems to believe in the renaissance of physical stores, as it recently debuted its first ‘Fashion AI’ concept boutique in Hong Kong. The store displays a selection of Guess apparel with the help of a "smart mirror" that shows product information on a special screen while shoppers are examining the items. The smart mirror points to where the garments in question can be found, utilising another way to bring the digital shopping experience inside physical stores using digital signage.
While digital kiosks aren't unknown to brick-and-mortar retail, in 2019 digital signage, will begin to offer additional interactivity, increased engagement, and a seamless omnichannel experience for consumers. For example, just one of the many benefits will mean customers will be able to use the interactive screens to order goods in-store to be delivered direct to their front door. Shoppers will be able to enjoy product visualisation that was once perhaps only available online via digital installations in physical environments, where experience will become a central point to the store of the future. Besides offering improved product visualisation, digital signage will also allow customers to browse goods that are not available in stores and select direct home delivery. All of this will be made possible with the introduction of omni-channel payment methods, such as Alipay and increasingly PayPal, that can be used online and instore with the same account, also acting as loyalty cards, to make payments easier than ever. Just about any shopping scenario will be possible.
The digital payment and transaction processing segment accounts for 40% of the fintech sector’s top deals in 2018. For example, PayPal’s $2.2 billion all-cash acquisition of Stockholm-based payments provider iZettle and Worldline, agreed to buy the payments unit of Swiss stock market operator, SIX Group, for $2.75 billion.
As for online and electronic payments processing, whilst the transactions were predominantly focused in the U.S market, the largest of these deals was the $442 million sale of First Data’s card processing business in seven European countries to its Italian rival SIA. Other prominent acquirers in 1H2018 include payments processing company, Paysafe Group, which was itself taken over by buyout firms, Blackstone and CVC capital Partners in 2017.
The implementation of Europe’s PSD2, is likely to be a major game changer for the M&A landscape as it will force banks to collaborate and innovate with Fintech providers, as well as encourage pan-European competition and participation in the payments industry, including non-banks. As a result, it is likely to encourage a high-volume of bank and Fintech M&As early next year. Those new to the market will therefore find a more level playing field with harmonised consumer protection and rights, which will encourage new entrants to the financial services market and fuel further M&A deal growth and valuations.
[1] https://www.ampproject.org/case-studies/wompmobile/
[2] 2018 PPRO Group Payment Almanac, Source: Edgar, Dunn and Company
Jumping straight into the top predictions for the security industry in 2019, below Reuven Harrison, CTO at Tufin, provides his thoughts on hacking, cybersecurity, and new technologies this year.
In 2019, we will see new cloud solutions providing security for public cloud coming from the traditional firewall vendors, following up on recent acquisitions of public cloud security companies. This trend is twofold. First, it is a response to the increasing shift of enterprises towards the cloud and their need for security in these environments. Second, the firewall vendors are also realizing the potential of the cloud as a superior platform for software development and big-data analytics.
In 2019, we’ll see the ongoing evolution of next-gen firewalls as they continue to absorb the functionalities of traditional network security solutions to include capabilities such as URL filtering
and other advanced security capabilities.
We will see an increase in breaches that use virtual assistants for privilege escalation or distribution of sensitive information. These attacks will manipulate people into inadvertently giving voice commands or playing audio on their computer, prompting a sequence of events that leads to information on company performance or to further gather network information to ease an attack.
The main factor behind the success of Kubernetes is how it simplifies and speeds up software development and deployment. For example, it enables "immutable infrastructure" which means that instead of deploying incremental changes to update your applications, you create a new version for every change – whether it’s in the application code or in the infrastructure. This concept brings tremendous benefits to the way we develop, deploy and operate applications (and how we secure them).
Another advantage of the microservices architecture is its ability to parallelise development. By decoupling application functions using microservices, large complex development projects can be broken up into smaller, independent teams, speeding up overall development.
In all respects, Kubernetes is driving an IT revolution.
2019 will be the Year of Lessons Not Learned: we’ll see the same security issues and the maturity of technologies that already exist.
In 2018, many organisations undertook their first steps to container security – which translated to vulnerability scanning – getting more data and false positives than they know what to do with and rendering security as a checkbox process. Vulnerable containers will still exist and remain accessible, and organisations can’t take action because they’re inundated with so much data.
Regarding security in the cloud, history is likely to repeat itself, and as the move to the cloud continues, we’ll inevitably see organisations spin up openly accessible servers and data in the cloud. This risk cannot be remediated with traditional security processes that are incompatible with DevOps CI/CD processes.
In 2019, we’ll see more emphasis on security in cloud-native organisations. Many are talking about it; this will be the year that they take action.
To do this, there will be an emphasis on automation. There’s no way that DevOps teams can get security into their environments without automation. To secure cloud-native environments, you must approach it from an automation-first perspective.
In 2019, we’ll see cyber turf wars in which hacking groups attack each other to reap the bounty of their adversaries’ resources. Previously established botnets mining cryptocurrency will be targeted over companies with financial data as the ease of exchange and redemption of this decentralised currency is much more readily accomplished.
Last year, we predicted that automation will reach the tipping point. This came true in the sense that organisations now understand they must adopt automation. What has slowed the process of full adoption is the cultural challenges. In 2019, we’ll see an acceleration of automation across the industry.
The insurance market exists to transfer risk from those who face it to those who can afford to assume it; at a price. In a world that is developing at an ever-increasing rate, risk is also changing, and insurers must constantly adapt the products that they offer to ensure that they are protecting risks that affect the modern world. Over the next few years, it can be expected that cryptocurrency covers will become commonplace and insurers will take a leading role in developing security standards.
At a time when the risk of bank robberies and wages snatches has declined substantially and motoring has become safer, aeroplanes are less likely to crash and other traditional areas of risk are declining, insurers must look to developing areas of risk and provide cover against those risks.
Not long ago, it was necessary, if one wanted to take money from a bank, to pull a stocking over one’s head, saw off a shot gun and take enormous personal risk, as well as the risk of being caught, in an attempt to deprive a near-by bank of cash. Today, the risks for robbers are much reduced but the risk for those holding money is greater. A modern robber can seek to steal money held across the world from the safety of his bedroom. His personal risk is considerably less as is, potentially, the risk of him being caught. The risk to those holding money, however, has changed and has possibly become greater.
While insurers were responsible for many of the innovations that made banks safer, now they must lead the way in enhancing security for those who hold cryptocurrencies. Insurers are working closely with cybersecurity experts to develop standards for their policy holders, often offering discounts for adoption.
Therefore, they are looking at uses of both cryptocurrencies and blockchain in the way in which they work. Already, insurers are being required to hold cryptocurrencies in order to handle some aspects of cyber insurance, particularly when their role may be to negotiate and pay ransom demands from hackers.
While insurers were responsible for many of the innovations that made banks safer, now they must lead the way in enhancing security for those who hold cryptocurrencies.
Where protection is given against cryptocurrency theft, insurers may increasingly seek to protect themselves against currency exchange fluctuations by charging premium, holding reserves and paying claims in cryptocurrencies.
In addition, the development of InsurTech is creating an environment in which insurers must compete to reduce premium levels by increasing efficiency. Expense ratios are already too high and insurers are looking to reduce these substantially on the basis that, if they don’t, their rivals will be able to undercut them.
As part of this efficiency, insurers are exploring uses of blockchain to reduce the frictional costs associated with the provision of insurance cover and obtaining reinsurance for it and some blockchain transactions have been concluded already. Major insurers and reinsurers are investing considerable time and money into this area and, without a doubt, the results of this investment will shortly become common practice.
One idiosyncrasy of insurance makes the creation of a closed contract for blockchain insurance problematic. Every insurance and reinsurance contract requires an insurable interest and proof of loss before any claim is paid. These elements mean that an entirely closed contract, which operates without outside intervention, is difficult. At some stage in the process, an adjustment of the claim will be required and an external element will have to be injected into the process.
That said, steps are afoot, both within insurers and regulators, to look at these issues and determine whether changes to the underlying principles may be effected, which would lift this potential road block.
To survive, insurers must embrace modern risk and modern working practices. The rate of change in the insurance industry is rapid and accelerating and within the next five years, we can expect considerable developments - both in terms of the risks that are assumed and the way in which risks are assumed.
Website: https://mccarthydenning.com/
According to recent research by IDEX Biometrics, more than half (53%) of cardholders would trust the use of their fingerprint to authenticate payments more than their PIN.
A further 56% of research respondents stated that they would feel more secure conducting purchases with their card, if they were authenticated with their fingerprint. It seems that payment card users are very aware of the limitations of their PIN with almost half (45%) admitting that they never change them. And a third (29%) expressing concerns that PINs cannot be relied on to keep their money secure.
This scepticism around current card security measures also extends to contactless payments with 63% questioning their security and 70% believing that they actually leave them exposed to theft and fraud when used.
It is evident, that as a nation, we are ready for the introduction of biometric fingerprint card authentication. The only area of concern users admitted to, was how their fingerprints would be stored. 45% were worried that criminals could mimic their fingerprint biometric data and a further 51% was concerned about the possibility of it being stored in a bank’s central database - leaving them exposed to identity theft or their personal information being used without their knowledge.
These findings highlight that banks need to provide reassurance that biometric fingerprint authentication can be used in a user-friendly manner. There is no need for this information to be retained centrally and that any fingerprint data is kept with the user on their own cards. Providing customers with the confidence that they can embrace fingerprint biometrics as a more secure and personal method of authentication for their payments.
“Consumers are ready for the use of biometric fingerprint methods of authentication for card payments and it is set to be a reality in 2019, but banks have a responsibility to address security concerns, particularly in relation to how and such data is held. It is ultimately up to the banks and the financial services sector to reassure consumers to drive adoption and ultimately tackle fraud head-on,” comments Dave Orme, SVP at IDEX Biometrics.
“With a resounding 53% of consumers stating they would trust the use of their fingerprint to authenticate payments more than the traditional PIN, this must be where the UK banking industry focuses its attention. Chip and PIN is now 12 years old, and has seen its course. The consumer demand for fingerprint methods of authentication is a reality, with two-thirds (66%) of UK consumers expecting their roll out to authenticate in-store card transactions by 2019,” added Orme.
(Source: IDEX Biometrics)
A greater proportion of IT decision-makers in the financial/banking sector see key financial services regulations as a driver of innovation (34%) than regard them as a barrier to it (24%).
More than a third (34%) of IT decision-makers across the UK financial sector regard key financial services regulations such as PSD2 and FRTB as a driver of innovation within financial services organisations, while fewer than a quarter (24%) see them as a barrier to it. That is according to survey of IT decision-makers across a range of financial and banking sector organisations, including retail and investment banking, asset management, hedge funds and clearing houses.
The survey, commissioned by software vendor, InterSystems, also found that just 20% of these decision-makers believe their organisation is very well prepared for the roll-out of the new regulations.
Graeme Dillane, financial services manager, InterSystems said: “Historically, firms have responded in a piecemeal fashion by putting in place new siloed applications to meet the needs of each new ruling. The latest round of regulations raises the stakes by effectively demanding businesses break down their data silos, better integrate their data enterprise-wide, and analyse it in real time in the context of new event and transactional data. All of that makes it vital that organisations innovate now.”
To lay the foundations for innovation, firms need automated systems. Currently, however, automation levels are low. Just 21% of the sample said they had fully automated the processes they had put in place to meet regulatory and compliance demands. 33% said they had not automated them at all.
More positively, the survey indicates that IT decision-makers across this sector are aware of what needs to be done to change this. Nearly two thirds (66%) said that they expect innovative technology will have an important role to play in ensuring regulatory compliance for financial services businesses over the next five years.
“It’s clear that financial services businesses increasingly understand just how crucial it is to actively innovate in order to address the challenges presented by the latest industry regulations,” says Dillane, “and the good news is that we are starting to see evidence on the ground that they are seeking out new solutions to help ensure their compliance.”
(Source: InterSystems)
