Why ‘secure digitizers’ are winning in financial services
The financial services industry is in an age of major disruption. Every firm is on a mission to navigate the new digital era, and some are doing far better than others. In fact, a recent global survey of retail banking executives predicted that four out of 10 retail banks will be displaced by digital disruption in the next three years. But those that are coming out on top have a secret weapon: security.
We recently conducted a comprehensive economic analysis to calculate the digital value at stake for private sector organizations across 16 industries, including financial services. Results from the analysis clearly showed that banks are facing a wide array of challenges on the road to digitization. They face increased competition from financial services firms, all-digital FinTech startups and even technology companies such as Apple and Google that are moving into the space. Banks also face an increasingly complex regulatory environment and demanding digital customers who expect highly personalized services and access to expert advice anytime, anywhere and through any channel.
None of these challenges comes as a surprise, but they need to be overcome now if banks want to remain competitive. Why? Because banks that fail to transform themselves through digitization, or fail to move fast enough, risk missing out on significant financial value and may even be put out of business altogether. With the right technology investments, banks can capture their share of a massive $405 billion in digital value that we estimate is at stake for the industry between 2015 and 2017.
The champions of digitization in the financial services industry are what have been categorized as “secure digitizers.” These companies are strongly committed to growth through digital business models and offerings with cyber security as a critical foundation. These strategic, forward-thinking companies have higher confidence in the security of key digital capabilities such as big data/analytics, cloud technology and the Internet of Things (IoT). However, according to a recent study, only 24% of financial services firms are secure digitizers.
All financial services firms have the capabilities and resources needed to become secure digitizers. But before embarking on this journey, there are a few key principles they should heed:
Manage cyber security proactively. Secure digitizers enable growth by ensuring safety of new experiences and innovations before they initiate them. Protect all confidential information through security capabilities that detect, respond to and remediate threats across all connected devices and assets.
Measure the business impact of cyber security effectiveness. Secure digitizers are also able to measure the direct business impacts of cyber security. For example, the monetary loss from a breach can be devastating for banks. By weighing the total potential costs of a breach against the costs of an effective cyber security program, the return on investment for security initiatives can be objectively argued and worked into a strategic business plan.
Have higher confidence in the security of key digital capabilities, including big data/analytics, cloud and the IoT. Initiating new and expensive digital capabilities can be terrifying for incumbents. However, by verifying trust in the security of modern technology and careful decision-making, secure digitizers are able to move forward. They understand that the potential costs associated with the risks of not digitizing greatly outweigh the potential costs of cyber security risks associated with big data, the cloud and the IoT.
Be more willing to pursue digital offerings, thereby accelerating innovation and time-to-market. Above all, secure digitizers are open-minded. They understand that they cannot wait to pursue digitization. They must innovate now and accelerate time to market. By blending video advice, analytics, remote expertise, interactive screens, connected ads and other capabilities, some innovative banks, including Bank of India and Poland’s mBank, are transforming their branches with new efficiencies and compelling customer experiences that will ultimately help them to dominate the market.
Without trust and confidence in security, growth suffers. By adopting the right digital technologies and business processes, banks can actually turn cyber security from a liability into an asset that supports innovation and growth.