Banks and credit unions continue to identify cybersecurity threats and fraud as the biggest challenges to their digital banking strategy, according to new American Banker research.
In the survey conducted in March and April, nearly 90% of the 200 banking professionals surveyed said cybersecurity threats are a “moderate” or “significant” challenge to their institutions’ digital banking strategies, rather than integrating legacy systems. with new digital technologies (86). %) and retain and attract qualified talent (77%).
As such, bankers listed security-related features as two of the top three technologies for enabling digital banking, with 55% saying enhanced security and fraud mitigation were vital to their goals and 50% saying digital identity verification is essential. That far surpassed the importance rankings of many other digital services, including chatbots (30%) and rapid app development (21%).
To a large extent, cybersecurity and fraud mitigation also motivated banks to partner with fintechs over the past year. The top two functions where bankers said they would “likely turn to or partner with fintechs for help” were peer-to-peer payments or money transfers and secure identity verification. For both, 45% of respondents said they were likely to seek help from fintechs.
Cyber security has been at the forefront of digital bankers’ minds for years, and major data breaches continue to plague the industry. This month, at least 10 banks got caught in a series of cyberattacks enabled by a vulnerability in the MoveIt file transfer service.
So-called supply chain attacks, like this latest series, pose a particularly serious risk to banks; the security of bank data depends on these third parties to manage the risk appropriately. Because that data includes consumer information, regulators require banks to examine their partners’ security systems, lest they be held liable after a breach.
Recent American Bankers research found that banks expect a large portion of their spending in the coming year to go toward 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 planned to increase their cybersecurity spending by at least 10% over the next year.
Nate Skinner, chief marketing officer of digital identity company Onfido, said one of the challenges financial institutions face when prioritizing their technology investments is that their strategies tend to be “all over the place” and that banks can generally focus More on specific problems.
“Pick a strategy: Maybe your anti-fraud posture could improve in a particular city, region or country. Solve that problem and then move on to the next one,” Skinner said. “I think too often when we have strategy conversations, they’re all over the place. We need to acquire new customers at the lowest possible cost and deliver and produce products… You’re trying to boil the ocean all our time.”
However, a single approach can address multiple challenges, particularly when it comes to fraud, cybersecurity, and financial crime. One of the many strategies banks have adopted to address these issues at the same time is merger 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 to various law enforcement agencies and companies. of the law.
In banking, merger centers serve 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 data-heavy banks trying to detect 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 anti-money laundering, detection and insights. of clients for Citigroup.
“Without a fusion technique and solving techniques, you’re just buried in data that you’ll never be able to classify, and you’ll miss out on the things you need to find,” Nathan said.