Financial Services Consumers and their Security Concerns
Author(s): Robert Olson, Posted on September 3rd, 2013
The financial services industry is facing a wave of challenges. There are constant regulatory requirements that organizations must adhere to, such as BASEL III, SOX, and Dodd-Frank. Cyber-attacks are becoming more prevalent and powerful because fraudsters, hackers and terrorists have increased their level of sophistication. Not only are financial institutions at risk, but so is the broader financial system and framework. A significant portion of expenses are directed to keeping the lights on while dealing with the costs associated with the ever changing regulatory and compliance landscape. Financial institutions face the costly and overwhelming task of trying to stay ahead of the IT curve and investing in emerging technologies, such as cloud and mobile banking, in order to gain a competitive advantage, cater to consumer demands and expand revenue streams.
While it is important to understand and discuss the industry landscape and its obstacles, even more imperative is to identify and discuss consumer concerns about the financial services industry. Consumer concerns tend to dictate and drive financial institutions’ priorities and focus. And right now chief among consumer concerns is security.
Unisys recently released the results of its Unisys Security Index, which is an annual global survey which measures how concerned consumers are about different aspects of security in specific industries. While the Unisys Security Index shows that Americans overall security concern is at an all-time low, it is clear that Americans have a high level of concern regarding personal security and the security of their financial institutions.
- A majority of Americans report they are somewhat, very or extremely concerned about identity theft (83 percent) and credit card fraud (82 percent).
- 52% of Americans are seriously concerned about other people obtaining and using their credit or debit card.
- 66.7% of Americans are seriously concerned about a data breach involving banks or other financial institutions.
Given consumers’ high concern for personal security and their extremely low level of trust in financial institutions, a cyber-attack of any size and magnitude can lead consumers to switch institutions, causing a major loss of revenue and customers for these organizations.
What must financial organizations do to step up their security, prevent sophisticated cyber-attacks, regain the faltering trust of consumers and ultimately protect and increase their revenues? Financial organizations must invest in next generation security technology,
Today, banks typically rely on a perimeter security model. If this is breached, criminals have access to all the bank’s systems and accounts. This has placed banks in reactionary mode for decades as cyber attacks have increased in sophistication and frequency. To keep cyber criminals at bay, banks need to:
- Limit data exposure for the bank and for users
- Segregate data and transactions inside the network so that only those with the right access know the transaction is occurring, making it invisible to others
- Cloak servers and PCs running sensitive applications or storing private information in the data center, making sure these servers are not visible to unauthorized users
- Setup and secure a new network or device in a short amount of time at a reasonable cost
Adopting the proper technology and strategic direction to deal with these current and future security challenges is of critical importance to a financial services company.