Banks fail to innovate, blaming info security fears, report
Senior executives at retail banks are motivated to offer digital services, but are held back by cyber security concerns, according to a new study.
Senior executives at retail banks are motivated to begin offerings available, but are held back by cyber security concerns, according to a new study. Cisco's report Roadmap to Digital Value in the Retail Banking Industry report pegged the value that retail banks could gain by launching digital services similar to those services offered by fintech competitors at $405.3 billion between 2015 and 2018.
Another Cisco report, Cybersecurity as a Growth Advantage, found that 71 percent of senior finance executives surveyed said cybersecurity risks slow technology innovation at their company.
A subset of security-focused employees, referred to by Cisco as ‘secure digitizers,' demonstrate a path forward for financial retail banks concerned with cybersecurity risks. The employees were “far better and more comprehensive in terms of how they insert cybersecurity expertise across the company from top to bottom,” Robert Moriarty, senior manager of thought leadership of the Cisco Security Group and author of the Cybersecurity as a Growth Advantage report, told SCMagazine.com.
“Even with some very compelling information that they will lose market share and risk being disrupted, many banks are still taking a wait and see approach,” Jason Bettinger, director of financial services of the business transformation group at Cisco, told SCMagazine.com. An earlier study published last year ranked financial services as one of the four industries out of 12 that are considered most likely to be disrupted by tech startups.
Financial services institutions, and much-maligned retail banks, have noted that their sector is more tightly regulated compared to high-growth financial technology companies, attributing their incremental steps towards digital innovation on a lopsided regulatory environment that favors fintech companies.
In March, payment platform Dwolla was fined by the Consumer Financial Protection Bureau (CFPB) for allegedly making false representations about the company's cybersecurity practices. The nominal $100,000 fine was one of the first regulatory incidents involving a fintech company.
“Fintech companies are a threat certainly, but they don't have the same breath of traditional financial services companies,” Bettinger said.