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As long-standing IT support partners to a wide variety of businesses in the finance sector, we see how technology is dramatically changing the entire industry. While there will always be the challenge of keeping customers and staying competitive, IT issues are an increasing concern for the financial world. From cybersecurity threats to regulatory compliance, IT must be kept in mind for the financial industry to operate in the new tech-orientated landscape.
While this push toward more advanced technology used in finance has had incredible benefits for both businesses and consumers, it hasn’t come without its challenges. With this newfound appreciation of technology, we’ve seen improvements in everything from consumer engagement and marketing to transactional speed and accuracy, however, when IT issues happen (and they do) it can end up costing businesses millions in lost revenue and fines.
What are the IT challenges in financial services?
Today’s data-driven digital world offers many opportunities for growth in the finance industry. However, the IT challenges in financial services are unrelenting and constantly evolving. For a finance business, it is important to not only keep your operating systems running smoothly but for your technical champion to keep the following IT issues in mind.
Challenge 1: Cybersecurity and data breaches
Data breaches continue to be a big concern for organisations in the finance industry. Due to the sensitive nature of their data, financial services remain a prime target for cybercrime. With the increase of transactions and communications online, security and risk mitigation have a huge focus over the last year. Even without these threats, regulatory compliance laws still push for security management. Failure to adequately assess and respond to potential risks can cause regulatory agencies to downgrade your companies hard-earned ratings and potentially take costly disciplinary action.
We know that maintaining data security isn’t easy, it requires a great deal of time and money. But it’s important that IT managers keep up to date on the latest threats and regularly assess the businesses security measures. According to a report, 90% of financial services IT executives said they felt vulnerable to data breaches, and 44% said they had already experienced a breach.
Some of the biggest sources of cybersecurity threats include the following:
- Outdated systems: Outdated systems are as dangerous as a hacker. Even skipping a few months of updates on your cybersecurity systems can leave you vulnerable to the latest hacking methods.
- Outdated hardware: Old hardware is dangerous too. Operating on an old computer means there are no security updates, leaving it vulnerable to hackers.
- Internal threats: Nearly 90% of all data breaches are down to human error. Poor security awareness, irresponsible browsing and many other issues can open the door for hackers, and this only covers unintentional internal threats. Disgruntled employees/ex-employees may also contribute to breaches. To combat this, financial organisations need to create security-aware cultures in their business to allow employees to operate efficiently and wisely. Not only does this help prevent employees from creating threats, but training employees to detect phishing scams and basic cybersecurity issues to alert IT staff, will significantly improve your line of defence against security threats.
- Ransomware: Cyber-ransom is one of the fastest-growing security concerns across every industry, affecting corporations, government agencies and private entities alike. The potential harm of these attacks can be devastating, putting essential operational data behind a paywall until the hacker gets their ransom. Small businesses, which account for 43% of all cyber-attacks, make for the perfect target as they often can’t afford the investments into security. Large businesses are also at risk. For example, the WannaCry ransomware attack was responsible. The combined costs of ransomware attacks in 2020 were estimated to be $20 (£14) billion. For many IT Managers, the worry is not if, but when their company will get hacked for ransom.
Any lapse in security not only risks your company’s data but the data of your customers as well. A breach could cost millions in lost revenue, lost business, and regulatory fines. So, in an industry that historically doesn’t like to invest money to fix IT issues, this poses a significant problem.
Challenge 2: Staying regulatory compliant
IT challenges in financial services go beyond security and infrastructure, keeping up with compliance regulations can be tough. Financial services are already one of the most heavily regulated industries and as the industry turns to new technologies, the regulations change.
What is compliance in financial services?
Financial compliance covers the actions, procedures, guidelines, and business culture that support all government legislation, industry regulations, and internal policies. It focuses on how the business, staff, workflows, operations, and relationships are managed at a financial services organisation.
Any failure to comply with regulations can result in data breaches, downtime, loss of reputation, huge fines and in some cases, imprisonment.
Challenge 3: Remaining competitive
Smaller companies have the flexibility to utilise technology and data to deliver financial services in new ways, raising the bar for established financial organisations. During a global FinTech survey, respondents thought a quarter of their business, or more, could be at risk of being lost to FinTech companies in the next few years.
Challenge 4: IT infrastructure and expertise
For an industry that depends so heavily on security, there is a board-level lack of understanding of the impact technology has on financial services. This lack of understanding has caused many problems within the financial IT industry, including the following:
- Small IT budgets: When looking to make cuts, the board of directors will usually turn to IT first. As a result, IT Managers have two options: Try to explain the importance of information technology in the finance industry to technologically illiterate board members or figure out how to work within their limitations. Neither option is particularly productive for the business.
- Poor IT infrastructure: Many financial organisations depend on outdated IT infrastructures with legacy systems to run their business. What they don’t realise is that it’s much harder to effectively run vital programs with these resources, not to mention the fact that outdated infrastructures run the risk of vulnerabilities. Unfortunately, many financial organisations are reluctant to undergo the necessary hardware and software upgrades needed to bring their organisation’s infrastructure into the modern age.
70% of the leaders said they were worried about the speed of technological change was a worry. However, financial services need to catch up, or keep up, with the latest technology to improve efficiencies and lower costs.
Overcome any challenge with Netitude
The impact of information technology on financial services is undeniable, and it’s only increasing. If you want your business to stay in the game and on top of the technological trends in the finance industry, it is important to have a dedicated IT team to champion your technologies and keep you in line with the latest regulations. If your in-house IT is bogged down by everyday IT issues, or if you don’t have one, outsourced help is the solution for you.
Netitude has been providing IT support to businesses in the finance sector for 20 years. We understand the specific and unique needs of the finance industry and our proactive approach to IT and cybersecurity means that we are always up to date on the latest trends, threats, and regulation changes. If you’d like to hear more about service then get in touch with one of our friendly experts, we are always happy to help!