Globalization 4.0 has had a massive outreach, and legacy financial institutions haven’t been left untouched. With fintech growing in leaps and bounds, banks are now more decentralized, democratized, and digitalized. While the idea is to make banking operations more customer-friendly, not everyone is completely sure about the security of the various aspects of digital banking. As data and connectivity grow in stature, there are cyber risks that industry leaders have to be wary of.
Banks and financial institutions have been conservative with their operations, especially in order to negate cyber risks. But, with rising competition from digital-only financial services, e-payment wallets, and cryptocurrency exchanges, traditional banks are gradually digitalizing their operations with a keen focus on security. Hacking and data pilferage are serious cyber security threats to the financial sector, but Industry 4.0 is enabling them with more technologically robust tools to keep the risks at bay.
It may be observed that threat actors have been proactive in exploiting digital loopholes within the cyber infrastructure of financial institutions, but cybersecurity tools too are growing cutting-edge in the pursuit of arresting cyber breaches. Unified Payment Interfaces and various applications of the blockchain technology is adding cybersecurity muscle to the financial institutions. Furthermore, crowd-sourced digital identity intelligence is also on the rise and could well be the answer to cyber threats.
In order to aptly address the cybersecurity conundrum, it is paramount for financial institutions, especially the traditional banking majors, to understand threats and the impact they can have on the entire ecosystem. With the number of internet users growing rapidly and enterprises focusing on customer experience, greater data is being generated every day. Additionally, with the proliferation of internet of things (IoT), sensitive data is being laid bare for poachers to prey on. It is, therefore, now important to upgrade the existing data and connectivity architectures with security as a key tenet of a process that remains customer-centric at heart and ensure trust.
Retail banking has taken customer-centricity to a whole new level with smart mobile interfaces making banking operations easier for the customers. However, mobile technologies being fairly new and customers not always being accustomed with the nitty-gritties of banking apps, make for a honeypot for cybercriminals. For banks and financial institutions, it is a crucial prerogative to create cybersecurity regulations and digital banking solutions that don’t compromise the security of data. One important thing worth understanding and accordingly strategizing for is the demography of users. While fintech has boomed over the last decade or so, most customers are from an era that precedes the digital explosion. It is, therefore, sensible for financial institutions to digitalize their operations and offerings in line with the customer limitations as well.
It is also worth accepting that technology is a double-edged knife that assists financial institutions and cybercriminals alike. Hence, upgrading security measures to stay abreast with technological evolutions and the consequent cybersecurity worries has to be the norm. Multi-layered security approach in digital banking empowers users and institutions to keep data secure. While the threats of ransomware and phishing will still remain on the horizon, a more robust security approach using AI & Advanced Analytics will be able to keep financial institutions and their customers ahead of the cyber threats emerging from Adversarial AI.
The Growing Reliance on Cryptocurrency
The traditional concepts of banking are expansion, safety, and easy liquidity of funds. While that has served the world well for centuries, the digital banking landscape is making the security of funds a massive cause of concern. As a result, financial institutions across the world are looking for a theft-proof way of transacting. Though fairly new and unchartered, cryptocurrency could be the answer to the trillion-dollar question. The blockchain technology has been heralded as a revolutionary disruption in the same league as the internet. It’s not for no reason. Blockchain relies on an intricate model of compositing data, making the process a highly secure one. Cryptocurrency like Bitcoin, Ethereum, and Ripple have therefore revolutionized how security of finances are viewed.
With more and more cryptocurrency exchanges like Binance, Upbit, and Bittrex growing in eminence and providing a secure platform for real-time transactions, it is beyond doubt that the financial institutions will come to rely on the blockchain methodology sooner than later. Coupled with the push from e-currency and e-payment digital-only platforms like Due, Adyen, Alipay, Google Pay, and Paytm, the traditional banks are now facing a serious identity crisis. For them to tide over the cybersecurity and banking threats and rediscover their operations, banks and legacy financial institutions will have to surely and certainly embrace the offerings of fintech without further ado.
A Safer, Surer Future
Cyberattacks are a pervasive concern, and a lot depends on industry leaders understanding the concept of cybersecurity in order to formulate digital strategies to keep the finances and the information safe. Studies have reflected poorly on organization leaders’ estimation of cybersecurity threats and their overall preparedness for data breaches. It is, therefore, critical for a thorough structure to be in place that puts cybersecurity at the very top of the list of priorities for financial institutions.
Digital transformation in banking will witness cyber laws, financial regulations, and data compliance norms playing a crucial role in making the financial sector more insulated to cyber risks. For the digital banking industry to be more holistically protected, the decision-makers across the spectrum have to stay abreast with the technological innovations while keeping their focus firmly on serving customers better. For financial institutions to vitalize Globalization 4.0, the change has to be bottom-up and exponential.
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