Fintech and cybercrime: how to survive an evolving landscape
The pace of digital transformation across the financial landscape continues to quicken, but how do banks and fintechs stay ahead of the threat?
According to Accenture’s 2019 Ninth Annual Cost of Cybercrime report, financial services incurred the highest cybercrime costs among all industries studied in 2018.
This report revealed several statistics, including that:
- Banking had the highest average annual cost of cybercrime by industry in 2018, at $18.37mn.
- The average number of security breaches rose in 2018 to 145, representing an 11% increase over the previous year and a 65% increase over the previous five years.
- Globally in those industries surveyed, the annual cost of cybercrime rose by 12% to $13.0mn in 2018, up from $11.7mn in 2017.
Technology and preparedness
In such an environment the digital or cyber threat proposition evolves rapidly, making it essential to maintain the highest standards of technology and preparedness, and keep up to date with the impact of cyber trends.
In its research, Accenture explains: “As industries evolve and disrupt the current environment, threats are dramatically expanding while becoming more complex."
It adds: "This requires more security innovation to protect company ecosystems. The subsequent cost to our organisations and economies is substantial - and growing.”
Across all industries, Accenture found that information theft is the most expensive and fastest rising consequence of cybercrime. However, it noted that there are several drivers behind the evolving global cybersecurity threat for all sectors:
- Evolving targets: data is no longer the only target according to Accenture. Rather, companies worldwide are seeing their core systems - controls systems and infrastructure - being hacked, which can lead to greater disruption.
- Evolving impact: it’s no longer just about theft. For example, cyberattacks are changing approach from simply stealing data to destroying or altering it to create distrust. Today, data integrity itself is vulnerable.
- Evolving techniques: attack methods are adapting quickly. Accenture found a focus on “the human layer” that targets the weakest link - people - through phishing and malicious insiders.
To combat this evolving threat landscape there are several steps that financial institutions should take, says Accenture. These are:
- Increase defenses against web-based attacks
- Focus on reducing ransomware occurrences
- Invest to prevent disruption to business
- Increase the deployment of technologies that have a high return on investment, such as automation, machine learning and AI
- Manage the use of ‘less effective’ technologies liek enterprise governance, advanced perimeter control and the extensive use of data loss prevention.
For more information, read Accenture's 2019 Ninth Annual Cost of Cybercrime.
For more information on all topics for FinTech, please take a look at the latest edition of FinTech magazine.
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Stripe backs Step - the digital bank for teens
The Series C round raised US$100m in capital from a number of backers, including Coatue, TikTok star Charli D’Amelio, actor Jared Leto, and Will Smith’s Dreamers VC, for the enterprise.
Step provides a free FDIC-insured bank account and Visa card to teenagers. The accounts are backed by Evolve Bank and there is no subscription charge for its usage. Users don’t pay for their accounts and there are also no overdraft fees.
The mobile banking app enables parents to set controls and limits on spending and encourage responsible finances. According to data released by the company, 88% of the platform’s users say this is their first bank account.
To date, Step has seen great success in the marketplace. The company has raised more than $175m from investors and now has 1.5m users.
Stripe, which was founded by Irish brothers Patrick and John Collison, previously led Step’s $22.5m Series A round in 2019.
Step's Series B funding round also brought in $50m, and has a distinctly celeb-tinged reputation with investors including Justin Timberlake and the pop duo The Chainsmokers.
Users get access to a free, FDIC-backed bank account, a spending card and P2P payments platform to send and receive money instantly.
CJ MacDonald, chief executive of Step, said the company is aiming to improve the financial futures of the next generation. “Step is the only banking platform that enables teens to start building a positive credit history before they turn 18 and does not charge fees of any kind.
He has previously spoken about the importance of financial literacy for young people. “Money is just one of those things where I think the more educated and equipped you are early, the better decisions you can make down the road,” he told . “And you can also prevent yourself from making costly mistakes. I mean, the average American doesn't have $400 in emergency savings and pays $350 a year in banking fees. If we can help this next generation just ultimately be smarter and more educated as it pertains to money, I think we'll all be better off.”
Kyle Doherty, managing director at General Catalyst and Step board member, explained, “Gen Z is flocking to modern financial solutions that can be easily embedded within their digital lives and Step has a unique model for how to do this right.”
The news follows on from Stripe’s recent announcement that it plans to acquire TaxJar. The fintech, which builds software for online businesses that automates the reporting and filing of sales taxes, will most likely be integrated with Stripe’s billing services.
Currently, No terms have been disclosed but the Boston start-up had raised more than $60m from investors including Insight Partners.
Stripe chief financial officer Dhivya Suryadevara said of the move, “With TaxJar, we will help millions of internet businesses running on Stripe with their sales tax and make it easier for them to sell internationally.”