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Opinion & Analysis

Cyber security key as finance firms go digital

Financial institutions need to take a consistent look at security, performance and availability of their critical technology assets in part by enabling security professionals in establishing cybersecurity. file photo | nmg
Financial institutions need to take a consistent look at security, performance and availability of their critical technology assets in part by enabling security professionals in establishing cybersecurity. file photo | nmg 

The 21st century brought about an all-encompassing convergence of computing, communication, information and knowledge. This development radically transformed how we live, work and think.

Many believe that electronic commerce (e-Commerce) now holds the promise of a new commercial revolution through its delivery of an inexpensive and direct way to exchange information and to facilitate traditional commerce through increasingly less traditional avenues.

The e-commerce revolution has precipitated another revolution in the banking sector, that is, the provision of a payment system that is aligned and supportive of the demands of today’s modern e-marketplace.

Consistent management and decision support systems provide the necessary edge to forge ahead in an increasingly competitive Financial Services Sector.

The recent legislation concerning interest rate caps has jolted the financial services industry into a state of heightened awareness. Players in the industry have awakened to the fact that they must now competitively differentiate themselves from the pack if they are to remain profitable.

Gone are the days of wide interest rate spreads that minimised risk and almost certainly guaranteed continued profitability. This context and the increased digitalisation of financial services makes security an indispensable consideration. According to the Global Centre for Digital Transformation (GCDT), the financial services industry is bound to be turned on its head as digitalisation has disrupted traditional operational models. Kenya has not been spared in this radical paradigm shift.

As institutions turn to technology, cybersecurity concerns have increasingly paralysed their initiatives. Their core operational systems is exposed to malicious actors whose intent is illegal monetary gain, either through the disruption of service or the electronic theft of financial assets.

In a survey of more than 900 business leaders across multiple industries across 13 countries, the GCDT revealed that the lack of a strong cybersecurity strategy will impact a company’s innovation and growth because it hinders development of digital offerings and business models.

Two thirds of surveyed executives said that concerns over cybersecurity are actively impeding innovation in their organisations and that uncertainty about cybersecurity is causing delay in critical digital initiatives: these initiatives can be key differentiators in an increasingly competitive economy. In particular, 39 per cent of surveyed leaders said they had halted mission-critical initiatives due to cybersecurity issues.

Accenture’s Technology Vision for Banking 2016 report inferences that Financial Service Institutions (FSIs) need more than the right technology. Institutions must supplement technology with a concerted effort to enable the right people to do the right things in an adaptable, change-ready, and efficient way. In short, technology should be leveraged to create a responsive liquid workforce that is adaptable enough to meet the needs of a more discerning consumer.

While FSIs know they must act fast to manage the disruption, they also recognise that their success hinges on people. Those that win will evolve their corporate culture to empower people - customers, workers and ecosystem partners - to both accomplish more with technology and usher in the new business strategies that those technologies drive.

The basic structure of the aging FSI is increasingly in conflict with the changing product, delivery, and service needs of the customers. This digitalisation, diversification and decentralisation of financial services clearly shows that the future belongs to Financial Service Providers and not the traditional bank.

In East Africa, and Kenya specifically, most commercial banks have established branch and agent networks that have enabled multiple touch points with their growing customer bases.
With digitalisation set to supplant 40 per cent of top 10 companies across all verticals due to their inability to change, addressing the security concerns surrounding these initiatives from a people, process and technology perspective has become unnervingly urgent.

There is an ardent need to understand their operating environments (IT and business operating environments), procure capacity and appreciate the needs of their employees (in order to better leverage them) people and partners (customers – in order to better serve them).

Financial institutions need to take a consistent look at security, performance and availability of their critical technology assets in part by enabling security professionals in establishing cybersecurity situational awareness programmes that can help allay and address risks that hinder the effective prosecution of digital initiatives.

Finally, it is worth noting Cisco - as a premier security solution vendor - espouses the view that the key to successful digitalisation and competitive differentiation is achieving this securely.

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