SINGAPORE—The information age has put more pressure on banks to adopt technology and innovation to cope with the influx of data and rising security challenges, but banks say the focus should be on building a robust system first.
The world has entered the information age and the instant accessibility and transfer of information will pose security and innovation challenges, Dave Gledhill, managing director and head of group technology and operations at DBS Bank said at IDC's Asian Financial Services Congress 2012 conference on Thursday.
With the proliferation of information including customer data, data from social media and big data, there will be greater difficulty in managing such data and keep them away from cybercriminals, and companies will need different methods for keeping their competitive edge, Gledhill explained.
Tony Chew, director and specialist advisor to Singapore's Monetary Authority of Singapore (MAS) also reiterated that information has brought about several cyber threats such as external attacks, internal sabotage and payment card fraud.
These cyberattacks and fraud will lead to the loss of revenue, business and consumer trust, he warned.
Chew cited an example from last year, where RSA had lost US$100 million and DigiNotar had become bankrupt from hacking attacks against their companies. The DBS ATM hack incident earlier this year also led to consumers questioning confidence in the bank's online system and security measures, he added.
"We cannot sacrifice security for productivity and efficiency," he said. "They come hand in hand."
Chew also pointed out that with the need to protect information, cloud computing was another vulnerability to financial institutions, and reiterated that none of the banks in Singapore have gone to the cloud due to security concerns.
He cited a Symantec survey which revealed that security was still the top reason holding back organizations from moving to the cloud--82 percent of respondents indicated it as a reason.
He urged financial institutions not to be "misled" by "all the hype surrounding the cloud", and urged companies to consider MAS' guidelines for banks before moving to the cloud such as having threat and vulnerability risk management and data center security audits.
Fix infrastructure, be efficient, before experimenting
Gledhill advised banks and financial institutions to focus on creating a robust platform so as to strengthen the resiliency, availability of security of banking for customers. He noted that if "bad things happen" such as a hack or system breakdown, the institution must always have a passive backup or standby plan.
Banks should first have a baseline of good infrastructure before they start to focus on innovation and shaping a competitive edge, he noted.
The second step is for financial institutions to be nimble, because speed is paramount in the finance industry, he added, advising banks to think big and look at details to figure out how to become more efficient.
Only then should banks take the third steo, where they can explore how they can leverage technology to create a good experience for their customers. He urged financial institutions to experiment with technology and be able to accept failures of innovation, just like "passionate technologists" such as Mark Zuckerberg and Steve Jobs.
He pointed out DBS Bank had been "experimenting with technology" such as social media and several mobile apps to create a more convenient and intimate banking experience between the bank and their customers.
He noted that the growth of the finance industry should emulate that of the airline industry. Airlines began by focusing on the safety and security. They then started to invest in being both cost-efficient as well as efficient to their customers by working on taking off and landing on time. Now, in the third stage, airlines are focusing on the on-board experience for customers such as in-flight Wi-fi.
"Similarly, banks should focus on developing a world-class infrastructure to mitigate security threats, to be efficient to its customers and then explore technology which will be interesting to customers," he remarked.