Banking Security in a Digital Age

Trevor LaFleche, IDC Financial Insights

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Medijski pokrovitelji

Sadržaj predavanja

• Current state of affairs– Downturn increases incentives

• Retail Banking– Expectations v. Human behaviour

• Corporate Banking– Increasingly complicated

• Internal Security!• Keeping it Simple

– Don’t let security take over

Banking Security in a Digital Age• The number of security attacks against the financial

services industry continues to rise as the economic downturn takes hold of the European Economic Area. While institutions struggle to deal with internal and external fraudulent activities, they also need to respond to increasing demands from customers for data transparency.

• How will banks tackle security in an increasingly open world?

The Downturn

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-3.7%In 2009. This represents the largest

contraction in GDP. Forecasts for 2010 are not very optimistic

CroatiaGDP will shink by

Negative IT growth for 2009, positive 2010• Forecasting in difficult times…• Probability of downside risk much

higher than of upside• Clearly most banks told to reduce IT

budgets in 2009:– Services contracts and software

upgrades renegotiated– Support teams cut– Non-strategic initiatives scrapped

• Results in the first contraction in IT spend – much worse than 2002 downturn

• However not all doom and gloom – fewer projects but with more strategic imperative

• Banks need to define profit making businesses in tight margins

2008 2009 2010 2011 2012 2013 -

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

EMEA FI IT Spending 2008-2013

Enterprise Utilities Consumer Banking

Corporate Administration Shared Services

Corporate & Institutional Banking

Number of banks in Croatia

Fraud

8

.07%Of all spending on credit and debit

cards worldwide is fraudulent!As the downturn grows so will fraud.

As much as

Increasing efficiency is still

the key

Initial responses to credit crisis/ recession

A typical bank’s agenda• Efficient & Cost Effective

– Need to be efficient – new business models/re-think core• Customer-centric

– People and companies have expectations (created & driven by the internet), but customer experience only as strong as your bank’s commitment to understand their needs

• Operational & Other Risks– Enterprise & IT risk controls are only as strong as your people, need

increased visibility, transparency & responsibility• Agility & Flexibility

– Are your systems and processes ready for new opportunities – can you change course in these fast-moving times?

– Your strategy is only as strong as you ability to deliver and the speed of your response

So what are the new realities in post-crisis banking?

Customisation is king

Customization… but not as we know itCustomers are no longer satisfied with basic transaction services but are looking for a services that help their lifestyle• Recognizing that there will be distinct segments of future consumers rather than one monolithic group called "the future consumer“ will be a key challenge (These distinct segments will demand various types of interactions based on their preferences instead of one common set of interaction needs.) • Building the road map will first require an assessment of the current customer experience and a vision as to where the FI wishes to be • One of the dangers will be in underestimating the challenge and complexity of building and executing a successful customer experience strategy that meets the needs of future consumers•It is all about MICRO-SEGMENTATION

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Evolution of BankingUtility BankingBasic ProcessingExtended ServiceLifestyle Enhancements

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Banking is moving into Lifestyle enhancements, however,

Business cases have Overestimated profitability of the segment and

Underestimated The effort to do it right

Banks lose control of data

Transparency even more critical• Access to cash essential for corporate treasurers:

– Banks that can improve the FX reporting tools they offer to their clients have an opportunity to increase customer satisfaction and market share.

– Banks that can quickly innovate and provide clients with new services to mitigate risk, increase cash visibility, and improve efficiency will gain market share.

SWIFTNet and TSU

End to End Financial Supply Chain Services

Collections / Receivables Management

Electronic Invoicing

Direct Corporate Connectivity

SEPA DD

Payments

New Internet Portal / Technologies

0 1 2 3 4 5

Bank Investment Priority

Matching investment priorities

• Clear emphasis on building better front end

• Moving from information access to product fulfilment, file and document processing and exchange

• Focus on mass market adoption and cost efficiencies

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Source: Financial Insights Survey 2009

What should banks do?

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4key areas can help banks manage

A focus on

Don’t forget the customer

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95%of customers think banks think too much about security and no enough about making their life easier

Up to

Find the real danger

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15worst global losses of data were either due to lack processes or human error

In 2009, the

Admit it is very complex

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17Interconnected systems to deliver even the most basic retail services

The average bank has

Four key things• Understand the customer

– Retail and Corporate• Security Policy

– Sexy IT stuff and the basics• Monitor the real risk

– Internal and External• Trust but Verify

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Hvala.