Scott M. Clements in Conversation with Finextra
Finextra: What are the top trends you're seeing around technology adoption in banks?
Scott M. Clements: The threat environment is changing quite rapidly and is becoming more active and more aggressive. One of the really big factors of that threat environment is identity theft. Every day, more than 40,000 to 50,000 identities are stolen. Stolen identity information can be used for many fraudulent purposes.
The second thing that is happening is the growth of fraud in the mobile space. Incidents of malware in the mobile space are growing extremely rapidly - almost a third of all malware today is happening in the mobile environment.
There are also significant regulatory changes, not only with PSD2 and GDPR in Europe, but in many regulations emerging all over the world. Governments want to protect their citizens’ privacy and identities. This can have a significant impact on the security considerations that banks have to put in place and the ways that they do their business. Additionally, the way that businesses and consumers think about and make choices about their banking service provider are evolving and becoming very driven by user experience in the digital space.
The financial services environment is evolving a lot. It requires banks to think much more about agility and how they can be more responsive, and they need to do these things in a way that is more secure than ever before, while delivering a good user experience. So it's very challenging.
Finextra: What new developments are you seeing around digital solutions and how are they having an impact on how customers interact with their banks?
SC: Increasingly, what technology is able to do is not only increase the level of security, but do that in a way that it improves the user experience.
In the past, when users or consumers had to authenticate into their bank account, it was traditionally a somewhat cumbersome process. That was okay when people were only logging into their bank on their desktop a few times a month, but today, people are accessing their bank account for many reasons, many times a day. So the actions that we used to do for security become burdensome when you have so many more activities that are happening. Today, digital solutions increasingly use data and biometrics to eliminate friction and change the way that people interact with their banks.
Another trend that is starting to emerge is that banks and financial institutions are moving more of their infrastructure to the cloud. Agility is becoming much more important for these institutions. When software is operated from the cloud there is a much greater ability to move quickly to adjust to changes in the threat environment and changes in the market that these banks can see.
Finextra: How should banks approach their digital strategy and response to these changes?
SC: First of all, they need to consider that the fundamentals are changing around the business. They can't just do things the way they've done them in the past. They have to be more thoughtful and forward looking about what the banking environment is going to look like and how they can compete in the future.
The issues I would point to specifically that banks should address are:
- Agility: The ability to adjust to the market and the threat environment in real time - which technology can increasingly achieve.
- Driving a superior user experience: Customers are paying attention to how good a mobile applications that they're using is. They’re evaluating how many different things can they do with those applications and how secure they feel when they're using those applications to carry out their financial life in the digital space.