{"id":6440,"date":"2018-11-09T10:11:23","date_gmt":"2018-11-09T09:11:23","guid":{"rendered":"https:\/\/www.fintechnews.org\/_\/?p=6440"},"modified":"2019-05-29T11:11:06","modified_gmt":"2019-05-29T11:11:06","slug":"banks-should-cash-in-on-cybersecurity","status":"publish","type":"post","link":"https:\/\/www.fintechnews.org\/_\/banks-should-cash-in-on-cybersecurity\/","title":{"rendered":"Banks Should Cash In On Cybersecurity"},"content":{"rendered":"

By Paul Schaus<\/p>\n

Banks have been at the forefront of cybersecurity for years, investing heavily to protect some of their clients\u2019 most valuable and sensitive information. Such heavy investment in cybersecurity<\/a> is increasingly the cost of doing business in financial services, but it also presents an opportunity for banks to generate a return on that investment by earning revenue from the cybersecurity solutions they develop.<\/p>\n

Analysts expect the global cybersecurity market to reach more than $120 billion by 2021,[i]<\/a>\u00a0and banks are well positioned to participate in that market.<\/p>\n

 <\/p>\n

As the industry grows more digital, banks are increasingly aware that the technology solutions they develop can become a source of revenue for them.[ii]<\/a><\/p>\n

Given the growing concerns around cyber threats both among businesses and consumers, as well as the billions of dollars the industry invests in cybersecurity annually,[iii]<\/a>\u00a0cybersecurity is a natural domain for banks to play the role of technology providers.<\/p>\n

Survey data suggests many banks are already eyeing this opportunity \u2014 two-thirds of bank CEOs see their cybersecurity investments as opportunities to innovate and find new revenue streams.[iv]<\/a><\/p>\n

Goldman Sachs, which has been highly aggressive in selling its technology, has already been taking advantage of such opportunities. The investment bank sold a cyber threat intelligence platform it developed, dubbed Sentinel, to cybersecurity company LookingGlass earlier this year,[v]<\/a>\u00a0and previously spun off a joint venture to provide advanced Bring Your Own Device (BYOD) mobile security solutions to other enterprises.[vi]<\/a><\/p>\n

Other banks have sold or spun off technology solutions they\u2019ve developed in other areas, such as loan origination tools. But cybersecurity is a major market where banks are in a unique position to deliver solutions.<\/p>\n

Banks already have deep roots in multiple customer segments \u2014 including retail consumers, small businesses, and corporates \u2014 that are all looking for help in protecting themselves from hackers.<\/p>\n

Also, many of the threats that these different customers face mirror those that banks are fighting every day. For instance, consumers and businesses alike are at risk of social engineering threats like those that cyber criminals routinely utilize to infiltrate banks\u2019 networks and customer accounts.<\/p>\n

This means banks can repackage tools they\u2019ve developed internally to serve these multiple customer segments with solutions for network monitoring and threat detection, identity and access management, data security, and other types of defenses.<\/p>\n

Additionally, these customers already entrust banks to protect some of their most sensitive information, suggesting banks already have high credibility when it comes to the strength of their cyber capabilities. One survey last year found that 83% of consumers trust their banks\u2019 cyber defenses to ward off hackers.[vii]<\/a><\/p>\n

 <\/p>\n

Banks also have a range of options to monetize cybersecurity solutions.<\/a><\/p>\n

They can sell the technology outright to other companies for their own use, or provide white-labeled solutions that other companies could turn around and offer to their customers.<\/p>\n

Banks could also provide services built off of solutions like advanced authentication or threat monitoring, and charge customers a recurring fee for them. Lastly, banks could spin off cybersecurity solutions<\/a> or form joint ventures with other companies in this space, and collect a portion of the new enterprise\u2019s revenue.<\/p>\n

Moving into the cybersecurity market will certainly present challenges. Banks that do so will face stiff competition in this market from more digitally native companies. However, many of those competitors don\u2019t have the high level of trust and credibility that banks have when it comes to keeping consumers\u2019 and businesses\u2019 information safe.<\/p>\n

Additionally, those competitors could also be viewed as potential partners in joint ventures.<\/p>\n

Of course, banks will have to invest in expensive cybersecurity talent and develop unique solutions in order to compete in the marketplace. But paying top dollar for cybersecurity personnel is becoming the cost of doing business in financial services as the threat landscape grows more complex and dangerous \u2014 and banks will need to respond to those threats with unique solutions anyway.<\/p>\n

Rather than treating those investments in cybersecurity talent and solutions as sunk costs, banks should explore turning them into new sources of revenue and profits.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Paul Schaus Banks have been at the forefront of cybersecurity for years, investing heavily to protect some of their clients\u2019 most valuable and sensitive information. Such heavy investment in cybersecurity is increasingly the cost of doing business in financial services, but it also presents an opportunity for banks to generate a return on that […]<\/p>\n","protected":false},"author":1,"featured_media":9072,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"advgb_blocks_editor_width":"","advgb_blocks_columns_visual_guide":"","footnotes":""},"categories":[2,51],"tags":[],"class_list":["post-6440","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-fintech","category-cyber-security"],"yoast_head":"\nBanks Should Cash In On Cybersecurity - Fintech News<\/title>\n<meta name=\"description\" content=\"Moving into the cybersecurity market will certainly present challenges. 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