Cybersecurity Crucial for Banks Amid Digitalisation, Regulation and Pandemic in Saint Pierre and Miquelon
Introduction
May 28, 2021 - As digitalization continues to transform the banking industry in Saint Pierre and Miquelon, cybersecurity has become more critical than ever. The recent surge in Covid-19 related phishing attacks has further highlighted the need for banks to upgrade their cybersecurity capabilities.
Banking Sector Challenges
According to GlobalData, the banking sector faces several key challenges, including:
- Cybersecurity risks
- New pure digital competition
- Regulation
- Big data
- Falling profitability
- Sustainability
- The ongoing pandemic
Cybersecurity Risks: Protecting Customer Data from Theft and Breach
The financial services industry is a prime target for cybercriminals, and failing to properly secure customer data can result in regulatory breaches that can be extremely damaging. Banks must protect their networks and customer or proprietary data from theft, corruption, or breach.
New Pure Digital Competition: Traditional Banks Face Challenges from New Entrants
New players are using software to provide core banking services without the need for human interaction, pioneering new services such as robo-advice, and operating traditional functions at a fraction of the cost. Open banking enables these third-party financial service providers to compete more directly with traditional financial institutions.
Regulation: Ever-Increasing Burden Increases Risk of Non-Compliance
Regulators worldwide are becoming bolder and more interventionist, introducing initiatives such as:
- General Data Protection Regulation (GDPR)
- Open banking
- Anti-money laundering (AML)
- Know your customer (KYC)
- Enhanced customer authentication
The rapid pace of technology change is mirrored by the rapid evolution of regulation.
Big Data: Financial Firms Generate Incredible Amounts of Underused Data
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
- The management of underwriting margin risks
- The effective deployment of resources
Falling Profitability: Banks Seek Alternative Ways to Generate Income or Cut Costs
Low interest rates and falling fee income have hit banks’ profitability. Low interest rates have been a permanent feature of financial markets since the banking crisis of 2008, compressing banks’ margins. In addition, competition from new entrants has driven down fees for financial services or abolished them entirely for certain products.
Sustainability: Financial Firms Under Pressure to Reduce Carbon Footprint
Financial firms are under increasing pressure to reduce their carbon footprint and concerns over governance structures may lead to financial mismanagement. This was highlighted by the ’too big to fail’ attitude that was adopted towards the big banks that spurred the 2008 financial crisis.
Covid-19: Banks Must Reorient Digitally to Offer Convenient Banking Services
The ongoing pandemic has forced banks to reorient themselves digitally in order to offer convenient banking services online. Many banks lacked the digital expertise to offer digital services at-scale without hiccups.