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WILL THE OPEN BANKING REVOLUTION LEAD TO A REVOLUTION IN CYBER SECURITY?

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WILL THE OPEN BANKING REVOLUTION LEAD TO A REVOLUTION IN CYBER SECURITY?

By Mark Leonard, CEO, Secure Cloudlink

Mark Leonard, CEO, Secure Cloudlink

Mark Leonard, CEO, Secure Cloudlink

With the rollout of the open banking initiative underway across the UK, one could be forgiven for thinking that this event would see a root and branch rethink on how sensitive data can be secured more effectively. Given the numerous hacks and cyber attacks that targeted commercial and public organisations in 2017alone, cybersecurity has never been so important as it is now. Yet despite this, banks and organisations appear wedded to old-style approaches to cybersecurity. Given the investment to date, it is perhaps understandable however it continues a policy that retains inherent flaws and weaknesses. If banks are to reform the way they view and address cybersecurity, the question becomes how they can do so in a way that removes the flaws of the old whilst strengthening their defences so they are truly prepared for what lies ahead.

The flaws in our security…

The Open Banking Initiative is predicated on sharing individuals’ highly sensitive financial information between banks and other financial services providers. As such it means that links have to be created between many different and disparate data stores. Unfortunately, more links usually mean more opportunities for cybercriminals to exploit.

It’s often said that any security is only as effective as its weakest link. The problem is that the growing plethora of IT infrastructure has only served to widen the security vulnerabilities. It’s no surprise that spending on security-related hardware, software and services rose to $73.7 billion in 2016 and is expected to reach $101.6 billion by 2020 according to IDC. The difficulty in today’s digital environment is that whilst the threat environment has become global in nature and more complex, certain aspects of the security, authentication and verification process remains rooted in a bygone age.  Specifically the continued use of passwords as a means to both access and authenticate individuals leaves individuals and organisations alike susceptible to continued and repeated cyber attacks.

Passwords, Falability& Artificial Intelligence – An unholy muddle

With the open banking initiative live and GDPR on the horizon, financial institutions are under even greater scrutiny to ensure the data they hold remains secure and is only accessible to those authorised to view it.  Despite advances in security protocols and procedures, passwords remain an integral part of the login/sign-in process used to authenticate and grant access of our secure information.

The problem is that we as a society have an over-reliance on passwords to secure our data. Passwords are amongst the most popular form of authentication yet they are fundamentally flawed. Human nature, being what it is, is often the primary weak spot in most system breaches.  One only needs to look at the range of cyber attacks that were launched last year to see evidence of this. The WannaCry attack that crippled the NHS last year tapped into the curiosity of individuals while the cyber attack on the UK Parliament exploited weak email passwords.  Passwords have become easy to crack by hackers and hard to remember by users, who often write them down or use the same, simple password across multiple sites and services.

To compound matters, the rapid advance of artificial intelligence and deep learning technology serves only to further highlight the inadequacy and limit of password-protected systems. As hackers start to tap into deep learning and other AI based technologies to gain access to our digital identities, it will become more and more of a problem. Recent academic research has already shown that theory-grounded password generation approach based on machine learning outperforms current password guessing tools.

Securing the individual to secure the organisation….

The usual response following previous cyber attacks has been to patch up any gaps and to build higher cyber walls around institutions. This has not solved the problem, if anything it has created a false sense of security and further adds to the vulnerability that individuals and organisations face.

Rather than continuing to try and turn financial institutions into impregnable digital fortresses, it’s time to secure the digital identity of the individual. For one, no bank can truly become an impregnable digital fortress for the simple reason that it has to conduct transactions and therefore needs to have digital doors. The question is how one passes through these digital gateways.

The answer lies in Anonymised User Access to web services. Such an approach enables greater levels of security and lowered costs for banks and service providers to access internet-based applications over the web more securely, without the user’s unique security credentials being transmitted or stored in the user authentication steps. 
This innovative approach, originally built for highly secure implementations, is now commercially available to organisations that want to make their customers’ digital identities and the data they control truly safe.  Moreover, the approach uses a highly secure, patented, encrypted, transient token capability that works with biometrics, pattern recognition technology and has an inbuilt one-time code for authorising users. Add an inbuilt, configurable, risk engine that assesses you in real time against factors like device, location, and previous patterns and will demand 2nd factor authentication on the fly and you effectively secure the individual. Anonymising and redacting all user data and target system information removes the opportunity and risk of an interception by malware or the many ‘man in the middle’ attacks. Securing the digital identity of the individual creates a far more robust and secure environment – one that eliminates the human factor and removes the need for passwords altogether.

Open Banking need not be an open door to cybercriminals…

For banks and financial services organisations, who are guardians of corporate and consumer data, addressing cybersecurity now requires a new way of thinking – one that eliminates human fallibilities whilst strengthening the authentication and verification process at the same time.  The open banking initiative is a turning point in how financial institutions address cybersecurity by the mere fact that individuals’ financial data will be shared between institutions and third parties.  Open banking offers the promise of convenience and simplicity for the consumer. Convenience however comes at a price and that price cannot be the continued unfettered and unauthorised access of consumer data due to security breaches caused by antiquated methods of security. It’s time for banks to accept that the password approach to cybersecurity no longer holds sway and that that securing the digital identity of the individual will ultimately secure their own future.

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ECB launches small climate-change unit to lead Lagarde’s green push

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ECB launches small climate-change unit to lead Lagarde's green push 1

FRANKFURT (Reuters) – The European Central Bank is setting up a small team dedicated to climate change to spearhead its efforts to help the transition to a greener economy in the euro zone, ECB President Christine Lagarde said on Monday.

Lagarde has made the environment a priority since taking the helm at the ECB, taking a number of steps to include climate considerations in the central bank’s work as the euro zone’s banking watchdog and main financial institution.

She is now creating a team of around 10 ECB employees, reporting directly to her, to set the central bank’s agenda on climate-related topics.

“The climate change centre provides the structure we need to tackle the issue with the urgency and determination that it deserves,” Lagarde said in a speech.

She said that climate change belonged in the ECB’s remit as it could affect inflation and obstruct the flow of credit to the economy.

The ECB said earlier on Monday it would invest some of its own funds, which total 20.8 billion euros ($25.3 billion) and include capital paid in by euro zone countries, reserves and provisions, in a green bond fund run by the Bank for International Settlement.

More significantly, ECB policymakers are also debating what role climate considerations should play in the institution’s multi-trillion euro bond-buying programme.

So far the ECB has bought corporate bonds based on their outstanding amounts but Lagarde has said the bank might have to consider a more active approach to correct the market’s failure to price in climate risk.

“Our strategy review enables us to consider more deeply how we can continue to protect our mandate in the face of (climate) risks and, at the same time, strengthen the resilience of monetary policy and our balance sheet,” Lagarde said.

(Reporting by Balazs Koranyi; Editing by Francesco Canepa and Emelia Sithole-Matarise)

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What to expect in 2021: Top trends shaping the future of transportation

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What to expect in 2021: Top trends shaping the future of transportation 2

By Lee Jones, Director of Sales – Grocery, QSR and Selected Accounts for Northern Europe at Ingenico, a Worldline brand

The pandemic has reinforced the need for businesses to undergo digital transformation, which is pivotal in the digital economy. In 2020, we saw the shift to online and cashless payments accelerated as a result of increased social distancing and nationwide restrictions.

The biggest challenge on all businesses into 2021 will be how they continue to adapt and react to the ever changing new normal we are all experiencing. In this context, what should we expect this year and beyond, in terms of developments across key sectors, including transport, parking and electric vehicle (EV) charging?

Mobility as a service (MaaS) and the future of transportation

Social distancing and lockdown measures have brought about a real change in public habits when it comes to transportation. In the last three months alone, we have seen commuter journeys across the globe reduce by at least 70%, while longer-distance travel has fallen by up to 90%. With it, cash withdrawals for payment has drastically reduced by 60%.

Technological advancements, alongside open payments, have unlocked new possibilities across multiple industries and will continue to have a strong impact. Furthermore, travellers are expecting more as part of their basic service. Tap and pay is one of the biggest evolutions in consumer payments. Bringing ease and simplicity to everyday tasks, consumers have welcomed this development to the transport journey. In-app payments are also on the rise, offering customers the ability to plan ahead and remain assured that they have everything they need, in one place, for every leg of their journey. Many local transport networks now have their own apps with integrated timetables, payments, and ticket download capabilities. These capabilities are being enabled by smaller more portable terminals for transport staff, and self-scanning ticketing devices are streamlining the process even further.

Lee Jones

Lee Jones

Ultimately, the end goal for many transport providers is MaaS – providing an easy and frictionless all-encompassing transport system that guides consumers through the whole journey, no matter what mode of travel they choose. Additionally, payment will remain the key orchestrator that will drive further developments in the transportation and MaaS ecosystems in 2021. What remains critical is balancing the need for a fast and convenient payment with safety and data privacy in order to deliver superior customer experiences.

The EV charging market and the accelerating pace of change  

The EV charging market is moving quickly and represents a large opportunity for payments in the future. EVs are gradually becoming more popular, with registrations for EVs overtaking those of their diesel counterparts for the first time in European history this year. What’s more, forecasts indicate that by 2030, there will be almost 42 million public charging points deployed worldwide, as compared with 520,000 registered in 2019.

Our experience and expertise in this industry have enabled us to better understand but also address the challenges and complexities of fuel and EV payments. The current alternating current (AC) based chargers are set to be replaced by their direct charging (DC) counterparts, but merchants must still be able to guarantee payment for the charging provider. Power always needs to be converted from AC to DC when charging an electric vehicle, the technical difference between AC charging and DC charging is whether the power gets converted outside or inside the vehicle.

By offering innovative payment solutions to this market segment, we enable service operators to incorporate payments smoothly into their omnichannel customer experience that also allows businesses to easily develop acceptance and provide a unique omnichannel strategy for EV charging payments. From proximity to online payments, it will support businesses by offering a unique hardware solution optimized for PSD2 and SCA. It will manage both near field communication (NFC) cards and payments from cards/smartphones, as well as a single interface to manage all payments, after sales support and receipt with both ePortal and eReceipts.

Cashless options for parking payments

The ‘new normal’ is now partly defined by a shift in consumer preference for cashless, contactless and mobile or embedded payments. These are now the preferred payment choices when it comes to completing the check-in and check-out process. They are a time-saver and a more seamless way to pay.

Drivers are more self-reliant and empowered than ever before, having adopted technologies that work to make their life increasingly efficient. COVID-19 has given rise to both ePayment and omnichannel solutions gaining in popularity. This has been due to ticketless access control based on license plate recognition or the tap-in/tap-out experience, as well as embedded payments or mobile solutions for street parking.

These smart solutions help consider parking services more broadly as a part of overall mobility or shopping experience. Therefore, operators must rapidly adapt and scale new operational practices; accept electronic payment, update new contactless limits, introduce additional payments means, refund the user or even to reflect changing customer expectations to keep pace.

2021: the journey ahead

This year,  we expect to see an even greater shift towards a cashless society across these key sectors, making the buying experience quicker and more convenient overall.

As a result, merchants and operators must make the consumer experience their top priority as trends shift towards simplicity and convenience, ensuring online and mobile payments processes are as secure as possible.

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Opportunities and challenges facing financial services firms in 2021

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Opportunities and challenges facing financial services firms in 2021 3

By Paul McCreadie, Partner at ECI Partners, the leading growth-focused mid-market private equity firm

Despite 2020 being an enormously disruptive year for businesses, our latest Growth Index research reveals that almost three quarters (74%) of mid-market financial services companies remained resilient throughout the pandemic.

This is positive news, especially when taking into account the economic disruption that financial services firms have had to go through since the crisis began. No doubt 2021 will also hold its own challenges – as well as opportunities – for firms in this sector.

Challenges outlook

Unsurprisingly, the biggest short-term concern for financial firms for the year ahead involved changing pandemic guidance, with 42% citing this as a top concern. With the UK currently experiencing a third lockdown many financial services businesses will have already had to adapt to rapidly changing guidance, even since being surveyed.

Businesses will also be considering the need to invest in working from home operations, and there may be uncertainty over re-opening offices on a permanent basis.  According to the research 30% of financial services firms are planning to adopt remote working on a permanent basis, so decisions need to be made now about whether they invest more in enabling staff to do this, or in their current office premises.

Due to Brexit, UK financial services firms are no longer able to passport their services into Europe, which may cause problems, particularly in the next 12 months as the Brexit deal is ironed out and the agreement is put into practice. Despite this, Brexit was only cited by 24% of financial firms as a short-term concern. While it’s comforting to see that UK financial firms aren’t hugely concerned about Brexit at this juncture, it is going to be vital for the ongoing success of the industry that the UK is able to get straightforward access to Europe and operate there without issue, otherwise we may see these concern levels rise.

Looking ahead to longer-term concerns for financial services businesses, the top concern was global economic downturn, of which 40% of firms cited this as a worry when looking beyond 2021.

Investing and adopting tech

Traditionally, the financial services sector has been slow to adopt digital transformation. Issues with legacy systems, coupled with often large amounts of data and a reluctance to undertake potentially risky change processes, have meant many firms are behind the curve when it comes to technology adoption. It’s therefore promising to see that so much has changed over the last year, with 45% of financial services firms having invested in AI and machine learning technology – making it the top sector to have invested in this space over the last 12 months.

One business that exemplifies the benefits of investing in machine learning is Avantia, the technology-enabled insurance provider behind HomeProtect. The business has undergone a large tech transformation in the last few years, investing in an underlying machine learning platform and an in-house data science team, which provides them with capabilities to return a quote to over 98% of applicants in under one second. This tech investment has allowed them to become more scalable, provide a more stable platform, improve customer service and consequently, grow significantly.

This demonstrates how this kind of tech can help businesses to leverage tech in order to offer a better customer experience, and retain and grow market share through winning new customers. This resilience should combat some of the concerns that firms will face in the next year.

Additionally, half (51%) of financial services firms have invested in cybersecurity tech over the last year, which allows them to protect the platforms on which they operate and ensure ongoing provision of solutions to their customers.

International resilience

Clearly, there is a benefit of international revenues and profits on business resilience. In practice, this meant that businesses that weren’t internationally diversified in 2020 struggled more during the pandemic. In fact, the businesses considered to be the least resilient through the 2020 crisis were three times more likely to only operate domestically.

Perhaps an attribute towards financial services firms’ resilience in 2020, therefore, was the fact that 53% already had a presence in Europe throughout 2020 and 38% had a presence in North America. This internationalisation gave them an advantage that allowed them to weather the many storms of 2020.

Looking at how to capitalise on this throughout the rest of 2021, half (51%) of are planning overseas growth in Europe over the next 12 months, and 43% in North America. Further plans to expand internationally is not only a good sign for growth, but should further increase resilience within the sector.

Conclusion

While there are many concerns, the fact that financial services businesses are investing in technology like AI and machine learning, as well as still planning to grow internationally, means that they are providing themselves with the best chances of dealing with any upcoming challenges effectively.

In order to maintain their growth and resilience throughout the next 12 months, it’s imperative that they continue to put their customers first, invest in technology and remain on the front foot of digital change.

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