Security and innovation don't go hand in hand in the financial services industry

Organisations in the financial services sector are forced to innovate in order to stay relevant. At the same time, innovation is being slowed down by the need to keep data and applications safe, putting organisations in this vertical in quite a tough spot.

This conclusion was given out in a new report by Claranet. The report says that striking the right balance between innovation and security is becoming a ‘key competitive differentiator’ in the sector.

The report itself is based on a poll of 138 IT and digital decision makers in financial services. Among those, more than half (57 per cent) said security is their biggest challenge. Almost two thirds (62 per cent) says that not being able to manage security properly is slowing down innovation.

“Financial services are under pressure from both a demand-side and a supply-side angle,” commented Jason Zimmer, a FinTech specialist at Claranet.

“With regards to the former, the 21st century consumer has become accustomed to near-seamless service from organisations. FinTechs and new start-ups are increasingly addressing these needs, resulting in increased consumer expectations when they engage with their financial services provider. In turn, this is putting more pressure on traditional financial services companies to do the same – not just in their client-facing applications, but in their internal operations too.”

Zimmer added that user experience on digital channels is an example of where security is proving to be a challenge.

“A key battleground in this rapidly changing market is providing customers with the best access to products, services, and assistance via digital channels. Digital-only FinTechs are taking this to a new level, with start-ups such as Atom Bank taking advantage of the modern consumer’s digital-savviness and intolerance of inconvenience to revolutionise how personal finance works.”

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