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Financial services firms are feeling particularly challenged by the need to secure their applications and data. For many this is hindering their efforts to adapt rapidly to changing market conditions. This is according to new research commissioned by a managed services provider. Claranet claims that finding a way to innovate whilst properly managing information security is fast becoming the key competitive differentiator in the sector.
Surveying 138 IT and digital decision makers across financial services companies, technology market research firm Vanson Bourne found that 57 per cent of financial services sector respondents considered information security to be one of the biggest challenges facing their organisation. These information security difficulties are having implications for the sector’s ability to adapt to a changing business environment, with 62 per cent of financial services respondents stating that an inability to properly manage security is holding back innovation.
Jason Zimmer, a FinTech specialist at Claranet, said: “Financial services are under pressure from both a demand-side and a supply-side angle. With regards to the former, the 21st century consumer has become accustomed to near-seamless service from organisations. FinTechs and new start-ups are increasingly addressing these needs, resulting in increased consumer expectations when they engage with their financial services provider. In turn, this is putting more pressure on traditional financial services companies to do the same – not just in their client-facing applications, but in their internal operations too.
“Regardless of the need to adapt to a rapidly changing market, however, security has to lie at the heart of everything that financial services organisations do – these businesses deal with some of their customers’ most sensitive information. In our research, we have found that too often the challenge of guaranteeing the requisite level of security has held back financial services organisations from adopting to this new reality.”
Zimmer cited the user experience on digital channels as an example of an area where security challenges are proving a problem for effective innovation: “A key battleground in this rapidly changing market is providing customers with the best access to products, services, and assistance via digital channels. Digital-only FinTechs are taking this to a new level, with start-ups such as Atom Bank taking advantage of the modern consumer’s digital-savviness and intolerance of inconvenience to revolutionise how personal finance works. However, 58 per cent of financial services organisations have found that securing customer details has been an obstacle when trying to improve this digital user experience for their customers.
“Whilst innovation and security can sometimes seem to be opposing priorities, in financial services they have to move hand-in-hand to prevent exciting initiatives from being stymied by a lack of data protection or compliance. For many financial services organisations, the best way to do this is by partnering with specialist organisations that understand the sheer breadth and depth of security threats. This gives the organisation space to focus its own resources on continuously improving customer experience and service. In an increasingly disruptive market that means finding new ways to do business whilst ensuring that customers and internal stakeholders are confident in the security of data.”