The Knowledge
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12th July 2022Technology in financial institutions looks different than it looked two years ago. While it was evolving for some time, Covid-19 was a catalyst for rapid growth. As a result, people are looking for online services from financial institutions much more than before, wanting the option to contact and complete actions on a laptop, phone or tablet. For example, newer and more agile banking services have been winning a new, younger demographic of customers through the app services they offer, meaning that larger, established high street banks must adapt to those changes as well.
Like businesses in other sectors, financial institutions are having to manage these changes as they also adapt to flexible, new ways of working internally as well as externally. They are using technology to change how their employees interact with each other and with the clients they serve.
While these tech-driven changes can be beneficial for clients and employees alike, they do pose new risks. Financial institutions are target-rich environments for cybercrime and as they adopt more technology, they increase their exposure to cyber attacks. According to IBM’s 2022 X-Force Threat Intelligence Index, financial institutions experienced 19 percent of all UK cyber attacks in 2021 – behind only the energy sector and on par with the manufacturing sector.
Ransomware attacks have become increasingly common in a number of industries, and while we haven’t yet seen a significant number of cyber claims in financial institutions due to ransomware, we’re aware of the threat and the need to protect against it. A State of Ransomware 2022 report from the cybersecurity firm Sophos found that while businesses are getting better at restoring data after an attack, ransom payments have increased by 4.8 times as compared to the 2020 average. The rapid transition to new systems and ways of working has generated vulnerabilities that cyber criminals are keen to exploit.
Financial institutions need to be aware of the risks and bring everyone along for the ride as they learn from them. This could mean having more tech support points available to help customers adapt to a service’s digital transformation – sort of a reinvention of the genius bar-style tech support you get from an Apple store. Along with this comes the challenge of training staff to accommodate a wider range of customers. As staff learn to respond to customers in new ways, they also need to learn how to best protect sensitive information on both sides. Hybrid ways of working, which are often supported by cloud-based systems and technology-based processes, may provide cyber criminals with opportunities to access valuable data.
Brokers can be valuable partners to clients by helping them see the opportunities while containing the associated risks. Cyber threats evolve almost in step with the defences available to deter them, so continuous vigilance is critical. Financial institutions stand to gain from digitisation by attracting a dynamic and useful client base that will stand them in good stead for years to come. But in their eagerness to modernise, they must take steps to ensure their institution is prepared to keep sensitive information secure and remain in compliance.
Walid Youssef is Head of Financial Institutions at Travelers Europe.
