By Stuart Facey, VP EMEA, Bomgar
Data breaches in financial services are unfortunately nothing new. They’re usually high profile, targeting the likes of likes of Wonga, Tesco Bank and Nationwide Building Society, and are typically the result of outside forces. While some place the blame for these breaches on legacy systems’ inability to cope with new forms of cyber attacks, or third party companies and vendors, the role of the insider is less considered.
New data from IBM’s X-Force Research found that human error is the biggest vulnerability to the financial services industry. It was found that insider involvement was the cause of 58% of breaches in 2016, with 53% either accidental or non-malicious and 5% a result of malicious intent.
It is clear from this research that there is not enough being done to protect financial services against insider data breaches and attacks, and Bomgar’s 2017 Secure Access Threat Report also found that one in three (33%) IT professionals believe it is at least fairly likely that former employees still have access to their internal systems and accounts. This is leaving a staggering number of businesses open to similar threats if they don’t address the issues presented by insiders and opens the door to sizeable GDPR fines if they are not compliant ahead of the May 2018 deadline.
As such, the dangers that insiders present to the financial services industry, whether they are employees or contractors, shouldn’t be underestimated. Contractors, for example, are one of the biggest challenges when it comes to managing employee and insider access. On one hand they can save organisations money and provide flexibility, however by virtue of their function or role they must be granted privileged access to, and rights within, corporate systems. This flexibility and nature of the contractor role also puts businesses at increased risk, as they often have high-level access to internal networks. Contracts can also be terminated at short notice, potentially leaving a hole in an organisations’ security. In fact, nearly a third (28%) considered third parties outsourcing elements of work to sub-contractors to be one of the most significant risks to network security.
The use of legacy systems is also still prevalent and adds another layer of complexity. The financial services industry continues to be plagued with problems caused by legacy systems, leaving it open as a key target for cyber-attacks due to the ease with which systems can be seemingly infiltrated.
A lack of stringent policies is also a hindrance in ensuring that systems remain secure at all times, with just over a half (56%) of organisations saying they have a written policy on their intranet, and only a third (36 %) having carried out an external assessment. This inconsistency in maintaining policies is worrying and should be a key concern for all financial services organisations. For example, research by the U.S. CERT Insider Threat Center showed that illegal activity on networks involving insiders typically happened within 30 days of them announcing their resignation. It is therefore imperative for employers to develop policies and procedures for both on and off-boarding employees that are directed at minimising the risks of data leakage.
Further to this, Verizon found that 63% of data breaches in 2016 involved weak, default or stolen passwords. With this in mind, businesses need to focus on preventing these weaknesses.
There are several core steps that organisations can take to securely manage credentials and control who can access their IT infrastructure:
- First, verify that employees and third-party vendors are who they say they are when requesting access to networks. Once confirmed, centrally manage all privileged accounts using an enterprise password vault so no passwords need to be written down, shared or stored in different places. A central vault also allows for organisations’ security and identity policies to be integrated.
- Next, use a credential injection solution, enabling users to authenticate or elevate privileges to remote devices and systems, granting access without revealing plain text credentials and passwords, which are commonly phished. Using a solution like this means that no passwords are ever seen by the user and they can gain secure, instant access to the systems they need. In conjunction with credential injection, a privileged access or privileged session tool allows organisations to control what people can access and when.
- Finally, ensure that all access sessions are recorded. If a breach occurs, it is immediately traceable to an entry-point and provides a full understanding as to what may have been compromised. With GDPR regulations requiring organisations to quickly notify their relevant regulator, customers and employees who have been impacted by any data breach, auditability is paramount.
In order to protect sensitive data for all its customers, the financial services industry needs to take a closer look at the insider threats posed by their employees and ensure all steps are being taken to protect data from all touch points. To do this, businesses need to look at employee education as well as implementing a range of ‘best-in-breed’ tools as part of a robust security eco-system.
While the financial services industry remains one of the biggest targets for hackers, if the above steps are taken to address the threats from within, we should start to see a drastic reduction in the volume of breaches overall. GDPR is a big priority not only for financial services, but for all businesses, and while privileged access and identity management may not be a stand-alone solution for overall security and GDPR compliance, it can address some of the main causes of data breaches.
The rise of AI in compliance management
By Martin Ellingham, director, product management compliance at Aptean, looks at the increasing role of AI in compliance management and just what we can expect for the future
Artificial Intelligence (or AI as it’s now more commonly known) has been around in some shape or form since the 1960s. Although now into its eighth decade, as a technology, it’s still in its relative infancy, with the nirvana of general AI still just the stuff of Hollywood. That’s not to say that AI hasn’t developed over the decades, of course it has, and it now presents itself not as a standalone technology but as a distinct and effective set of tools that, although not a panacea for all business ills, certainly brings with it a whole host of benefits for the business world.
As with all new and emerging technologies, wider understanding takes time to take hold and this is proving especially true of AI where a lack of understanding has led to a cautious, hesitant approach. Nowhere is this more evident that when it comes to compliance, particularly within the financial services sector. Very much playing catch-up with the industry it regulates, up until very recently the UK’s Financial Conduct Authority (FCA) had hunkered down with their policy of demanding maximum transparency from banks in their use of AI and machine learning algorithms, mandating that banks justify the use of all kinds of automated decision making, almost but not quite shutting down the use of AI in any kind of front-line customer interactions.
But, as regulators are learning and understanding more about the potential benefits of AI, seeing first-hand how businesses are implementing AI tools to not only increase business efficiencies but to add a further layer of customer protection to their processes, so they are gradually peeling back the tight regulations to make more room for AI. The FCA’s recent announcement of the Financial Services AI Public Private Forum (AIPPF), in conjunction with the Bank of England, is testament to this increasing acceptance of the use of AI. The AIPFF is set to explore the safe adoption of AI technologies within financial services, and while not pulling back on its demands that AI technology be applied intelligently, it signals a clear move forward in its approach to AI, recognising how financial services already are making good use of certain AI tools to tighten up compliance.
Complexity and bias
So what are the issues that are standing in the way of wider adoption of AI? Well, to start with is the inherently complex nature of AI. If firms are to deploy AI, in any guise, they need to ensure they not only have a solid understanding of the technology itself but of the governance surrounding it. The main problem here is the shortage of programmers worldwide. With the list of businesses wanting to recruit programmers no longer limited to software businesses, now including any type of organisation who recognises the potential competitive advantage to be gained by developing their own AI systems, the shortage is getting more acute. And, even if businesses are able to recruit AI programmers, if it takes an experienced programmer to understand AI, what hope does a compliance expert have?
For the moment, there is still a nervousness among regulators about how they can possibly implement robust regulation when there is still so much to learn about AI, particularly when there is currently no standard way of using AI in compliance. With time this will obviously change, as AI becomes more commonplace and general understanding increases, and instead of the digital natives that are spoken about today, businesses and regulators will be led by AI-natives, well-versed in all things AI and capable of implementing AI solutions and the accompanying regulatory frameworks.
As well as a lack of understanding, there is also the issue of bias. While businesses have checks and balances in place to prevent human bias coming into play for lending decisions for example, they might be mistaken in thinking that implementing AI technologies will eradicate any risk of bias emerging. AI technologies are programmed by humans and are therefore fallible, with unintended bias a well-documented outcome of many AI trials leading certain academics to argue that bias-free machine learning doesn’t exist. This presents a double quandary for regulators. Should they be encouraging the use of a technology where bias is seemingly inherent and if they do pave the way for the wider use of AI, do they understand enough about the technology to pinpoint where any bias has occurred, should the need arise? With questions such as this, it’s not difficult to see why regulators are taking their time to understand how AI fits with compliance.
So, bearing all this in mind, where are we seeing real benefits from AI with regards to compliance, if not right now but in the near future? AI is very good at dealing with tasks on a large scale and in super-quick time. It’s not that AI is more intelligent than the human brain, it’s just that it can work at much faster speeds and on a much bigger scale, making it the perfect fit for the data-heavy world in which we all live and work. For compliance purposes, this makes it an ideal solution for double-checking work and an accurate detector of systemic faults, one of the major challenges that regulators in the financial sector in particular have faced in recent years.
In this respect, rather than a replacement for humans in the compliance arena, AI is adding another layer of protection for businesses and consumers alike. When it comes to double-checking work, AI can pinpoint patterns or trends in employee activity and customer interactions much quicker than any human, enabling remedial action to be taken to ensure adherence to regulations. Similarly, by analysing the data from case management solutions across multiple users, departments and locations, AI can readily identify systemic issues before they take hold, enabling the business to take the necessary steps to rectify practices to guarantee compliance before they adversely affect customers and before the business itself contravenes regulatory compliance.
Similarly, when it comes to complaint management for example, AI can play a vital role in determining the nature of an initial phone call, directing the call to the right team or department without the need for any human intervention and fast-tracking more urgent cases quickly and effectively. Again, it’s not a case of replacing humans but complementing existing processes and procedures to not only improve outcomes for customers, but to increase compliance, too.
At its most basic level, AI can minimise the time taken to complete tasks and reduce errors, which, in theory, makes it the ideal solution for businesses of all shapes, sizes and sectors. For highly regulated industries, where compliance is mandatory, it’s not so clear cut. While there are clearly benefits to be had from implementing AI solutions, for the moment, they should be regarded as complementary technologies, protecting both consumers and businesses by adding an extra guarantee of compliant processes. While knowledge and understanding of the intricacies of AI are still growing, it would be a mistake to implement AI technologies across the board, particularly when a well-considered human response to the nuances of customer behaviours and reactions play such an important role in staying compliant. That’s not to say that we should be frightened of AI, and nor should the regulators. As the technology develops, so will our wider understanding. It’s up to businesses and regulators alike to do better, being totally transparent about the uses of AI and putting in place a robust, reliable framework to monitor the ongoing behaviour of their AI systems.
Simplifying the Sector: How low code can aid digital transformation in financial services
By Nick Ford Chief Technology Evangelist, Mendix
From online banking to contactless payments and Apple Pay, it has been well demonstrated that the financial services industry is significantly ahead of many others when it comes to technology.
Traders, as well as customers, are now armed with the latest advances in technology and able to operate at super speed with more information at their fingertips than ever before.
However, the sector has not been immune from challenges created by COVID-19. The most significant challenge is maintaining the level of innovation they have been historically known for, with constrained budgets and smaller teams.
The pressure is on
The financial services sector is certainly quite complicated. There are many different regulatory bodies that monitor corporate conduct, which can make innovation a slow and arduous task. It also means that every time a new law is implemented, the sector needs to adjust to it, and that can mean anything from revising security protocols to radically changing the way information is processed, transmitted or audited.
This makes the job difficult for IT managers in the sector. Many of the systems they’re dealing with are old fashioned, dating back many decades and therefore not up to standard when it comes to performance and security. With lockdown restrictions meaning most sector staff are working remotely, this adds an extra pressure to IT teams that now have to ensure systems, data and work devices are functioning and always accessible. Digital transformation can help with this and a recent Mendix study found that 76% of IT managers in the sector believe it can improve operational efficiency.
Tech as a necessity
The sector now must be alert due to a new emerging challenge – the tech savvy customer. The modern age means customers are demanding much more from the services they are offered, with two things being highly desired; speed and transparency. As a result, many banks, hedge funds, and investment firms are investing in the appropriate technology to help meet these demands. The data that comes with upgrading ultimately allows financial institutions to better understand their customers and tailor their services more accurately to the changing trends influencing customer behaviour, Being able to have such knowledge is becoming more vital, as the pandemic continues to significantly affect the behaviour patterns of consumers and the preferences driving them.
Investing in technology can also increase efficiency within the sector at a time where teams and budgets are stretched, which can obviously have massive benefits. Digital transformation also leads to faster, better performing systems provides teams with the right tools they need to effectively get their job done. Tech is no longer a fintech privilege – it’s a currency. So much so that nine out of 10 IT leaders in financial services believe their firm will need to invest in digital projects over the next two years, just to survive in a rapidly changing market.
Powering digital transformation with low-code
To manage these different priorities, IT teams need to look beyond themselves and collaborate with different departments to create revenue-generating services that truly answer the clients’ needs – and it needs to empower all developers with the right tools to do so. This improved collaboration between IT and customer-facing staff means that services are designed to suit the needs of the customer-base, whilst reducing the pressure of an already-stretched IT team.
Low-code is one way to foster this collaboration. It requires little coding knowledge or expertise, meaning software development or the creation of business applications can include staff with non-technical backgrounds. Instead of having a back and forth between tech teams and other departments – of which miscommunication is always a risk – the development of apps can be inclusive involving a variety of teams, bringing together those that understand the business problems with those that understand the IT landscape, core systems and services to contribute to the vision of a product. IT stays in control with governance and guardrails built in to ensure compliance to the various standards required.
Digital transformation is an ongoing process in every industry. With low-code programming some of the current complexities and challenges facing the financial services sector can be tackled, allowing it to fully step into the digital age and continue being a hub of technological innovation.
Leading from the front – why decision makers must embrace automation
By Jeppe Rindom, Co-founder & CEO, Pleo
Ask any decision maker at a business about admin and you’re likely to be met with a familiar response – it’s a necessary evil that swallows time, but also helps inform strategic choices. Informed decisions are always better than uninformed ones, but many businesses still rely on outdated legacy processes to gather the data they need to make critical choices… and we’ve all seen the perils of a poorly maintained Excel spreadsheet in the news recently.
At director level, these administrative tasks can consist of signing off expenses or monitoring company spending to inform upcoming budgets. Although crucial to running a business well, these can be time-consuming and frustrating when you don’t have the right tools to make sense of it all. The solution? A simple change of approach.
A logical solution
This is where automation comes in. Over the last decade, we’ve seen how technologies including chat-bots and artificial intelligence have impacted everyday business, from customer-services and marketing to data analytics and time-management. More than ever, this is allowing employees to free up time to work more efficiently and focus on business-critical tasks. But this isn’t a quick fix. At a decision making is required. Ironically, a lot of these tasks relate to how a business can improve efficiency and productivity.
Add in the fact that many of these senior staff members have tight schedules, and can’t afford to spend several hours trawling through spreadsheets, and it’s little wonder high level admin is still an issue. In a recent customer survey, we found that 75% of senior managers spend over an hour a week on expense reports, with 14% losing nearly a whole working day (five hours or more) a week to managing them – time that could be better spent growing their business. The same study found that our platform saves people an average of 11.5 hours a month on managing company expenses. If you consider this could mean an extra day for a CFO or Finance Director to spend on more essential tasks, such as business forecasting or growth planning, the reward for investing in well designed automation at this level is clear.
But, automation isn’t just a case of saving time; it also fosters trust. Our study found that over half (51%) of users agreed that automating the laborious parts of their expenses like receipt capture, categorisation and expense reports also helped them build trust within their organisation. Automation helped them to excel at the things they’re most interested in, and were actually hired to do. I’m a huge advocate of empowering people with the tools they need to succeed. And through the empowerment automation brings, it’s only natural that employees begin to feel their worth in the business and that they are trusted.
A business-wide approach
Yet for automation to work, a company-wide understanding of its potential is vital. Adoption by senior staff should not be seen as simply a fringe benefit, as automation relies on understanding and endorsement from all levels of a business to work efficiently. A report titled ‘Automation and the future of work,’ published by the British Government in September 2019 noted that the successful implementation of automation “relies on managers and business leaders themselves being able to understand the potential of automation and the impact of technological change.” In this respect, managers will be your biggest ally when embracing automation. Any manager worth their salt understands the benefits of leading through example, and by creating automation ‘advocates’, businesses can ensure teams are comfortable with the impending change. While many busy managers often resist new processes (especially those to do with unfamiliar technology), they usually find that investing a short amount of time getting to grips with an automation platform pays off in the long term.
One of the most frequent pieces of feedback we receive is that an effectively automated platform allows staff to focus on strategy, culture and creativity, with the knock-on effect of automating mundane tasks being felt throughout an entire organisation, not just one relieved individual.
Having a smart, automated platform can also massively reduce the chance of human error at an early stage. This can be disastrous when data is relied upon to make important decisions at a later date. In this respect, having access to accurate information can be a game-changing benefit for decision-makers, particularly those working under increased pressure.
At a time when businesses are facing rapid and unpredictable changes, ensuring your business is equipped with the right tools for success is crucial. And while automation may seem an intimidating change, the huge benefits it can bring to both processes and culture will outweigh any initial concerns. By giving senior staff and their team members alike the ability to embrace smart automation, efficiency will speak for itself, and your business’ success will flourish.
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