According new research by American Banker.
In the survey conducted in March and April, nearly 90% of the 200 banking professionals surveyed said that cybersecurity threats pose a “moderate” or “significant” challenge to their institutions’ digital banking strategies, more than integrating legacy systems with new digital technologies (86%) and retaining and attracting skilled talent (77%).
For example, bankers cited security-related features as two of the top three technologies for enabling digital banking, with 55% saying improved security and fraud mitigation were critical to their businesses. goals and 50% saying digital identity verification is essential. This far outpaced the importance rankings of many other digital services, including virtual assistants or chatbots (30%) and rapid app development (21%).
To a large extent, cybersecurity and fraud mitigation have also prompted banks to partner with fintechs over the past year. The two main functions for which bankers said they were “likely to turn to or partner with fintechs for help” were peer-to-peer payments or money transfers and secure verification of identity. Either way, 45% of respondents said they were likely to seek help from fintechs.
Cybersecurity has been at the forefront of digital bankers for years, and major data breaches continue to plague the industry. This month, at least 10 banks have obtained caught in a series of cyberattacks enabled by a vulnerability in the MoveIt file transfer service.
So-called supply chain attacks such as this latest round pose a particularly serious risk to banks; the security of banking data relies on these third parties to manage the risks appropriately. Because this data includes consumer information, regulators are requiring banks to verify their partners’ security systems lest they be held liable after a breach.
A recent study by American Bankers found that banks expect a large portion of their spending in the coming year to be devoted to preventing data breaches, a continuation of past spending trends. In another survey last year, American Banker found that more than 60% of financial services companies plan to increase their cybersecurity spending by at least 10% in the coming year.
Nate Skinner, chief marketing officer for digital identity company Onfido, said one of the challenges financial institutions face in prioritizing their technology investments is that their strategies tend to be “everywhere” and banks can usually focus more on specific issues.
“Pick a strategy — maybe your fraud posture could be improved in a particular city, region, or country. Solve that problem, then move on to the next,” Skinner said. “I think too often when we have conversations about strategy, they’re all over the place. We need to acquire new customers at the lowest possible cost, be compliant, and produce products…You’re trying to boil the ocean all our time .”
However, a single objective can address multiple challenges, especially when it comes to fraud, cybersecurity, and financial crimes. One of the many strategies that banks have adopted to tackle these problems at the same time is that of fusion centers, a concept borrowed from law enforcement.
In law enforcement, fusion centers are government-owned and operated centers that serve as focal points in states and major urban areas to receive, analyze, collect, and share threat-related information with various law enforcement agencies and companies.
In banking, fusion centers perform the same function for the financial institution by acting as a central repository for data on cybersecurity, fraud, money laundering, terrorist financing, and other risks. For banks dealing with large amounts of data trying to catch all of these threats, fusion centers offer a solution that breaks down data silos and can support other business goals, according to Scott Nathan, global head of cybersecurity. money laundering, detection and customer information for Citigroup.
“Without a fusion technique and resolution techniques, you’re just buried in data that you can never sort through, and you’ll miss the things you need to find,” Nathan said.