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The future of fintech hinges on cyber security
Cybersecurity is key to preserving the UK’s fintech success and dominance in the global ranks, says Andrew Roughan, Managing Director, Plexal.
If you fail to prepare, you are preparing to fail. A saying that rings true in all walks of life, but perhaps not one that springs to mind when thinking of UK fintech. After all, the industry has little to worry about, at least at first glance.
Despite the ongoing political and economic turmoil, fintech keeps breaking records and looks as healthy as ever – latest investment figures from Innovate Finance showed new highs of funding reaching £2.3bn in the first half of 2019.
Fintech’s intense growth shows no signs of stopping, but is it safe to assume the current trajectory will continue? Future-proofing and looking at long term success should be the priority now, particularly given the advanced challenges the industry is set to face in the world of cyber.
We can no longer ignore the central role cyber security is playing in our lives. The Global Risks Report released at Davos earlier in the year put cyber-attacks as the fifth greatest threat we face, the only non-climate or environment related threat.
The message from the global leaders is clear. Cyber-attacks are here to stay, and companies should be wary of it.
The wave of fintechs that has sweeped the UK grew out of the financial crisis and the public’s thirst for greater trust, accountability and transparency from financial organisations.
Companies like Monzo and Revolut have scaled at pace, and many are now eyeing global expansion – and rightfully so. But are they looking after the basics that will preserve trust in the long run? After all, trust is what boosted their growth in the first place.
Not only are cyber threats and security breaches increasingly common, they are becoming more sophisticated and advanced – using intelligence to generate greater damage than ever before. Gone are the days of broad-brush attacks that could be easily fought off.
This can lead to daunting consequences on a substantial scale, beyond just compromising company data. Ultimately, cyber attacks undermine brand trust, and as much growth as fintech companies have seen, they are still nascent in the eyes of the consumer.
Just think about British Airways and Facebook. Both have recently suffered major data breaches, yet BA retained public trust thanks to the long-standing brand position, while Facebook is still feeling the consequences of Cambridge Analytica with usage numbers dropping.
If even a giant like Facebook can be derailed overnight by a security breach – underlining the uncertainty of brand safety – budding fintech companies need to have the issue of cyber front of mind.
But rather than reflecting on missteps and reacting to challenges posed, fintechs should be proactive in finding cyber solutions.
All fintech companies are inherently cyber companies – it’s the security and stability of their product that generated growth in the first place. Now, it’s time to invest more intensely in that side of the business, and look for ways that future-proof the sector.
Collaboration is key here. Our cyber industry must work alongside fintech against a common challenge. Coordinated efforts must happen between start-ups, corporates, government and academia to find the best possible solutions for the cyber age.
It’s precisely what we are focusing on at Plexal, running the government-backed LORCA programme. While corporates are after the fresh thinking of new innovators, start-ups benefit from investment and institutional framework offered by larger organisations, and government is able to stay a step ahead with technology solutions. In the end, all are working towards the same goal and aligning early in the process will deliver the right results.
Boosting our cyber industry will in turn support the growth of other sectors, and the UK has a unique opportunity to be a world leader. We must create the collaborative conditions for cyber companies to grow, and facilitate access to global markets to effectively export the technology. That has worked for fintech, and it can work for the new age of cyber companies as well.
Opportunity is the operative word here. Yes, cyber-attacks are damaging and rightfully recognized by the WEF as a major global threat. But they equally offer a springboard for growth and innovation, and can supercharge our tech sector.
London can successfully retain its leading position in fintech, but only by preparing for security threats in the evolving technological landscape. The future will revolve around cyber, and by beginning to prioritise cyber security we can remain one step ahead – exactly why the UK has succeeded in the tech sector in the first place.