Cybercrime on the Rise in British Indian Ocean Territory’s Banking Sector
The world’s increasing digitalization has made the banking industry a prime target for cybercriminals. In the British Indian Ocean Territory (BIOT), banks are facing unprecedented challenges in protecting their networks and customer data from theft, corruption, or breach.
Key Challenges Faced by the BIOT’s Banking Sector
Cybersecurity Risks
According to GlobalData, cybersecurity risks pose one of the key challenges for the BIOT’s banking sector. With recent spikes in Covid-19 related phishing attacks, banks must upgrade their cybersecurity capabilities every time they upgrade their digital infrastructure to prevent breaches.
New Pure Digital Competition
New players are using software to provide core banking services without human interaction, pioneering robo-advice and operating traditional functions at a fraction of the cost. Open banking enables these third-party providers to compete more directly with traditional financial institutions, making it essential for banks to innovate to stay ahead.
Regulation
Regulation is playing a crucial role in shaping the BIOT’s banking landscape. Regulators are introducing initiatives such as:
- General Data Protection Regulation (GDPR)
- Open banking
- Anti-money laundering (AML)
- Know your customer (KYC)
- Enhanced customer authentication
These initiatives increase the risk of non-compliance if banks fail to comply, which can lead to reputational damage.
Rapid Evolution of Technology and Regulation
The rapid pace of technology change is mirrored by the rapid evolution of regulation. Banks must adapt quickly to these changes to avoid falling behind.
Big Data
Big data is a significant challenge in the BIOT’s banking sector. Financial services firms generate incredible amounts of data that is often siloed and underused. Better use of enterprise data can improve product design and promotions, risk management, and resource deployment. However, incumbent banks with legacy infrastructure are at a disadvantage to smaller firms with infrastructure that supports better data usage.
Additional Challenges
Low Interest Rates and Falling Fee Income
Low interest rates and falling fee income have hit the BIOT’s banking sector’s profitability. Banks are looking for alternative ways of generating income or cutting costs to drive bottom-line growth.
Carbon Footprint and Governance
Financial firms are under increasing pressure to reduce their carbon footprint and improve governance structures to avoid financial mismanagement.
The Covid-19 Pandemic
The Covid-19 pandemic has accelerated the need for digital transformation in the BIOT’s banking sector. Many banks lack digital expertise, which has led to struggles in offering digital services at-scale without hiccups. This has resulted in consumer demand for convenient online banking services.
Conclusion
As the BIOT’s banking sector continues to face these challenges, it is essential that banks prioritize cybersecurity, innovate to stay competitive, and adapt to changing regulations and customer demands.