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Among the financial industry trends beginning to dominate the sector, technology is likely to have the biggest impact. Banks and financial institutions have been slow to incorporate cutting-edge technology into their systems, making the industry ripe for disruption. But with the potential benefits technology brings come increased security risks.
“We really are only at the beginning when it comes to the opportunity that exists for technology to profoundly change what we recognize today as ‘trading’ — but I, for one, feel very excited about its future,” says Michael Spencer, who has 40 years of experience as a money broker and is the founder of ICAP, an electronic markets and post-trade services specialist.
When Spencer started out, he was using chalk prices on a board. But today, algorithms are used to automate trading, as technology is slowly transforming the trading world. Spencer states that as financial institutions increasingly embrace new technology, we’ll see the industry change irrevocably as the universal bank is replaced by smaller, more specialized banks.
Cybersecurity Must Be Top of Mind
Just as banking technology is changing, so are its would-be attackers. While some criminals do still rob banks in person, it’s becoming a much less frequent occurrence as cybercrime becomes more pervasive, with the financial world one of its primary targets. Recently, we’ve seen how hackers have cracked the SWIFT messaging system to steal $81 million in one fell swoop. Returns like this make it all the more tempting for others to attempt. With technology currently among the top financial industry trends, implementing strong cybersecurity policies alongside cutting-edge systems is key to protecting services.
One of the top benefits of technology across all industries — be it healthcare, government or education — is giving employees more flexibility in how they work, including the option to work from home. For banks, making sure that employees are aware of the importance of cybersecurity at all levels is crucial, and providing the right tools, protected with the right level of security — such as Samsung’s Knox platform — is just as important.
Another threat to security is the move to cloud computing. A recent survey by the Cloud Security Alliance found that within the financial industry, data protection and security was “top of mind” for those surveyed. It also found that there’s still a need for more regulations and security standards to be set, though a lot of work is already being done to address this.
The adoption of other technologies can also work to help secure systems. Blockchain technology, which many major financial institutions are working on, creates a tamper-proof ledger that makes transactions not only instant, but also easily verifiable by an entire network of banks, making it much tougher for criminals to abuse.
In order to combat the growing number of cyberthreats, regulators are beginning to tighten cybersecurity standards for financial services firms.