1489313 - Hogan Lovells FIS Horizons 2021 update - Flipbook - Page 7
Financial Institutions Horizons
7
The acceleration of digital channels:
Managing the fraud and cybersecurity risks
The shift to digital channels – which has been ongoing for many years with the
emergence of FinTechs, the needs of a new digital-savvy generation of customers and
the desire to manage costs – has accelerated rapidly during the pandemic. With
customers and staff unwilling or unable to visit physical locations, institutions have seen
customers who have previously avoided digital switch to online and app-based
channels. How can institutions keep themselves and their customers safe from fraud
and cyberattacks in this new world?
For a number of years now, financial institutions
have been embracing digital but some customer
demographics have been resistant to change.
The pandemic has led many more customers,
including those who were traditionally wary,
to embrace digital out of necessity during
lockdown or self-isolation. A recent survey of
regulators around the world had 60% reporting
strong increases in the use of digital payments
and remittances and 20% reporting strong
increases in the use of digital banking services and
digital savings platforms. COVID-19 has forced a
rapid acceleration of a trend that would ordinarily
have taken many years to reach this point.
While this may be good news for institutions
looking to drive down costs, and good news for
customers who learn to embrace the benefits that
digital channels can bring, it also comes with a
potential threat. Cyber criminals are also aware of
the shift and are keen to exploit the opportunities
that digital channels can bring for the unwary.
These attacks can take many forms from simple
phishing emails seeking to exploit confusion
about COVID-19 in an attempt to uncover login
details, to more sophisticated impersonation
fraud, to ransomware attacks.
Against that backdrop, what should institutions
be thinking about to counter this threat? Some key
steps include:
•
Consumer and employee education:
What steps can you take either alone or on an
industry basis to keep consumers and employees
educated about the latest scams and help them
protect themselves and the organization?
•
Fraud prevention: Are your fraud controls
sufficient to mitigate fraud? Is the balance
between fraud prevention and frictionless
customer experience set right? Is management
information monitored to alert you to the need
for possible changes at an early stage?
•
Be prepared: Make sure you have a robust
cybersecurity incident plan so you know how
to respond. And test that plan in a fully-remote
working environment. Do you for example
know who needs to be involved in the response
and who to contact in law enforcement and at
regulators? Does your plan reflect latest U.S.
government advisories on the financial crime
implications that could apply if you choose to
make a ransomware payment to end an attack?
Band 2 for FinTech
Chambers Global 2021
