Professionals in the financial services industry are focusing their energy on regulation and data management, according to a survey from consulting firm and technology services provider Synechron.
Financial regulation remains the top concern for the new year among those in the financial industry, with 38% of the firms surveyed marking it as their “top priority.” Specifically, the participants were most concerned about the MiFID II, closely followed by Dodd-Frank.
From the report:
Global events like Brexit, the results of the U.S. election, the threat of Frexit and more, have also created an environment of regulatory uncertainty that will prompt more steering committees in 2017 to assess options and develop plans that can be quickly enacted at the trigger moment.
2017 certainly seems to be following the regulatory pattern of the previous year — the Consumer Financial Protection Bureau is likely to change its regulations when it comes to banking overdraft fees, for example — and the steady movement of the banking world toward a more modern, technological approach means more proposed regulation when it comes to new technologies like blockchain or artificial intelligence (29.2% of survey respondents considered it a top concern, according to the report).
This makes the second greatest concern — data management — all the more important, as banks shift to offering more mobile services, build out more APIs, and develop more keen KYC tools, all while protecting consumer data.
According to Sean Feeney, CEO of cybersecurity company DefenseStorm, which provides cloud computing security services for financial institutions, the cybersecurity issues observed in 2016 aren’t going to dissipate.
“The [cybersecurity] threat is going to continue—the challenge for the fintech or banking industry is going to balancing the need of the consumer with a growing and very necessary regulatory environment,” says Feeney. “They have to deliver [their services] to customers and make money at the same time, which can be challenging especially for smaller banks.”
For this to happen, some have expressed the need for innovation and regulation to work together more closely — BBVA Executive Director José Manuel González-Páramo stated today at a payments conference that banking regulation should pick up its pace to match technology’s speed, as opposed to slowing technology development.
Switching over to the cloud from a legacy system may provide some security benefits. More cybersecurity firms are utilizing big data and machine learning — or maybe artificial intelligence — to analyze threats, a benefit to the fintech industry, according to Synechron’s survey.
From the report:
In 2017 open, unified solutions will continue to be launched by banks and insurers and make it possible to deliver new digital products and services, whilst still maintaining a multidimensional customer experience across all digital channels. We are also seeing a rise of the usage of public cloud technologies in banking, with firms moving or considering moving risk and IT infrastructure to Google or Amazon. This indicates a major shift, after a gradual adoption of private cloud technologies and recent FCA guidance green-lighting cloud computing.
Keeping up that omnichannel consumer experience is going to be critical to success for these financial institutions, however, especially as the 92 million-strong first digitally native generation continues to trickle into the workforce.
“As millennials are entering the workforce, their patience with old[er] software is rapidly falling by the wayside,” says Feeney. “What the cloud provides is speed, agility, and efficiency.”
