Legacy banks don't have the IT to fight financial crime
Amid increased security breaches and financial crime at incumbent banks, security has become a paramount concern for these organizations. However, it's rapidly becoming clear that banks won't be able to shore up their defenses until they tackle the vulnerabilities caused by outdated technology.
Ever-evolving financial crime methods are the single biggest concern for UK banks, at 44%, according to a new survey of 168 UK banking members by LexisNexis and the British Banking Association (BBA). At the same time, the study found, 92% of respondents are concerned that their organizations' legacy technology will become an obstacle to combating financial crime in the next one to two years. This means that only 39% of banks feel ready to protect themselves against criminal threats specific to cybercrime.
Respondents cited specific technological obstacles to fighting financial crime caused by legacy systems:
An inability to fight financial crime is just one side effect of a more fundamental problem for banks. In a digital economy increasingly centered on data handling, dealing effectively with financial crime means being able to analyze data accurately, and in real time, to garner actionable insights. However, even in the face of such high concern about inadequate financial crime defenses, only a small number of banks have begun the process of replacing their legacy technology with new systems designed for a modern banking environment. Most banks have been deterred due to the expense, duration, and operational risk such overhauls entail. As cybercrime becomes more sophisticated, banks will have to make a call about whether continuity or the security of their systems is a higher priority in the long term.
Open banking is the democratization of access to data previously exclusively owned by legacy financial institutions.
The open banking trend is being driven by a number of factors and will ultimately become the norm. That means retail banks need to rethink their business and operational models if they want to maintain the positions of dominance in the financial ecosystem.
Sarah Kocianski, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on open banking that explores the drivers behind open banking in detail, outlines the options for banks as they look to update their business and operational models, and explains the likely potential winners and losers of open banking.
Here are some of the key takeaways from the report:
In full, the report:
Interested in getting the full report? Here are two ways to access it:
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May 31, 2017 at 03:06AM