“Cyber crime” poses a major threat to the stability of UK banks. That’s one of the findings in last Monday’s Systemic Risk Survey from the Bank of England. It’s not the top-most concern — that post is still held by the risk of an economic downturn, followed by sovereign risk. But nearly a quarter of risk managers put operational risk as a major worry, and in this category the biggest threat was seen as cyber security. The rise in the cyber crime threat was enough to warrant the headline in the Financial Times.
Cyber security was one of the key topics we discussed last month in the FICO Fraud Council. Many banks are now looking to merge their cyber security and fraud departments, with an aim of getting a more comprehensive view of the customer that can inform all defense systems.
CTOs and CIOs are also driving the focus on cyber security, especially as they are charged with promoting online and mobile banking. These channels enable banks to reduce operating costs and improve the customer experience, but customers can easily be scared off by publicized attacks, data leaks or cyber heists. Banks are spending millions on new products and channels, and they need to make sure the brand isn’t tarnished, that they have strong customer adoption. As a result, fraud control is moving from reactive to proactive investments, with the IT department holding much more purse than the fraud department.
Whether you call it cyber security or enterprise fraud management, it’s clear that banks have a renewed focus on taking a comprehensive view of the customer, and integrating point-system protection into an integrated defense platform. FICO’s work with banking leaders around the world validates the importance of this approach — and the potential for massive improvement when it’s done right.