Cybersecurity a top priority as banks turn toward digitalisation, innovation

Cybersecurity a top priority as banks turn toward digitalisation, innovation

By: 
Stanislaus Jude Chan
30/01/18, 03:37 pm

SINGAPORE (Jan 30): Close to nine in 10 banks globally say addressing cybersecurity in the top priority in 2018, amid a shift toward digitalisation and innovation for future growth.

To this end, some 73% of banks around the world are planning to invest in technology to mitigate cybersecurity threats, according to the EY Global Banking Outlook 2018 released today.

The report surveyed senior executives at 221 banking institutions across Asia-Pacific, Europe, North America and emerging markets. These include nine banking institutions in Singapore.

“As the pace and scale of technological change reaches hyper innovation, banks must handle increased levels of complexity that blur the perimeters between internal and external risk,” EY says in the report.

“In addition to cyber risk, technological change risk expands as new technologies are onboarded and brought to scale, while financial crime risk, and reputational and conduct risk become increasingly mired,” it adds. “Managing these developing risks is key to maintaining high levels of digital trust.”

The focus on cybersecurity comes as 85% of banks say the implementation of a digital transformation programme will be a business priority for 2018.

According to EY, investment in technology to drive efficiency and growth as well as manage evolving risks is seen as critical for sustainable success.

To successfully insulate themselves against the impacts of future downturns on financial performance and business continuity, EY says banks must complete the transition from regulatory-driven transformation to innovation-led change and become more digitally mature.

Globally, an average of 62% of banks say they aspire to reach digital maturity by 2020.

“Asia-Pacific has a much higher penetration of digital and mobile technology adoption than many other regions,” says Jan Bellens, EY Global Banking and Capital Markets’ deputy sector leader.

“Mainland China, for example, has the highest rate of fintech adoption in the world and many of the big cities there are effectively operating as cashless environments,” he adds. “Compare this with the US, where cheques are still prevalent, and the relative benchmarks for financial digital maturity look quite different.”

In addition, the survey found that banks in developed Asia-Pacific markets, such as Hong Kong, Australia and Singapore, are focusing on developing partnerships with fintechs, investing in technology to reach customers and improving risk management.

Some 82% of respondents in the region list these as their top business priorities for 2018.

“The majority (75%) of banks in the developed Asia-Pacific markets and half (50%) in emerging markets also stated they are planning to set up new partnerships or JVs in their core markets in 2018. So, we are likely to see greater collaboration between Asia-Pacific banks and e-commerce or other technology platform players, particularly as open banking reforms progress in markets such as Australia, Hong Kong and Singapore,” Bellens says.

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