Banking CIO Outlook

3 Cybersecurity Novelties by European Tech Startups

Banking CIO Outlook | Monday, June 22, 2020

European tech startups are emerging with strategic rethinking to tackle cyberterrorism—the most critical and immediate concern for most banks today.     

FREMONT, CA: Banks all around the world are reimagining their business processes to put customer demands at the centre. Digital transformations, combined with an always-connected, tech-savvy customer and an emerging hacker industry, is creating heightened security risks that banks must address immediately. Europe also encircles banking revolution, and this is set to be pivotal with seismic developments ranging from the onset of GDPR, the implementation of Payment Service Directive (PSD) and the ongoing evolution of security-based solutions. In many ways, Europe represents the perfect storm in terms of the challenges and opportunities that modern banking portends. Everything from KYC and open banking to security authentication are bringing about the most significant changes to the financial operation in decades. And startups are in the driving seat by offering advanced security solutions. Here are the ones worth considering for banks to gain an improved security posture.

• Identity Proofing

Stay ahead of the industry with exclusive feature stories on the top companies, expert insights and the latest news delivered straight to your inbox. Subscribe today.

The way some banks onboard and verify the identities of their customers online is often inconvenient and insecure. This results in lowered customer satisfaction and loyalty and security breaches leading to compensation payouts and legal costs. Onboarding and verification are increasingly being set by more tech-savvy players outside the banking industry. If banks want to keep customers loyal, they have to start innovating this area with identity proofing solutions. The trick is to streamline verification for customers without compromising accuracy with the help of emerging technologies including biometrics, optical character recognition, blockchain, cryptography, and many others. This will help successfully digitize customer identification that could help them secure a valued place, relevance in the modernized economy.

10x Banking provides a suite of enterprise-grade technologies, including compliance reporting and security, which includes identity verification services. Its technology enables a single point entry for financial institutions to engage with customers through a secure connection. The startup is in the UK and has raised $64.81 million in total funding. Onfido, the London based identity verification solution provider is on its mission to help banks build trust in the digital environment. It leverages artificial intelligence to verify people's identities digitally.

Check out: Top CyberSecurity Companies

• Data Encryption

It must come as no surprise that the banking industry is among the most regulated among all sectors. Aside from personally identifiable information, the banking industry also regularly handles data that includes income, credit score, collection history, and non-public personal information. The first step that banks and financial institutions can take is to deploy encryption based on industry-tested and accepted algorithms along with strong key lengths. There are many levels within an organization that encryption can be used. It can be implemented at the database level and application level. It is easier to use and is within reach of even the most modest budgets.

Boxcryptor is a European company providing cybersecurity solution for banks with its end-to-end encryption software optimized for cloud storage. The mission of the company is to make elaborate security solutions easy to use for banks by keeping control of their data. Comcrypto is another specialized security solution provider in the encryption of enterprise communication. It works to make optimal security user-friendly and cost-effective.

• Biometric Authentication

Biometric authentication is nothing new for the banking industry. Fingerprint scanners are a typical example of a commonly accepted form of non-password authentication. But with cyber-terrorism on rising, banks are looking for better ways of managing authentication systems. The challenge is to tackle authenticators and meet compliance standards. Authentication will allow customers to sign on to accounts seamlessly using one authentication method. Now banking customers are even using biometric authentication at ATMs, and some are pioneering new authentication methods. The biometric framework will integrate biometric authenticators such as voice, fingerprints, retina, or iris of the eye or a combination of these identifiers. Identification methods can be achieved on built-in biometric sensors. Billions of banking customers are shifting to digital platforms, and it is becoming more critical than ever for banks to offer a mobile platform for logging into accounts using biometric authentication.

AimBrain is a London based startup that offers biometric as a service to help financial institutions fight fraud. Its function includes verification based on customer's voice, and behavioural authentication like looks and how customers interact with the device, their typing speed or the way one handshake. Biometric authentication startup SmilePass with its game-changing technology is helping financial institutions build trusted customer communities and protect their customers from fraud, social engineering, and theft. SmilePass uses cutting-edge deep-learning and face-matching technology, tokenized verification, and server-based security validation - all incorporated into consumer-friendly applications.   

Cybersecurity has been of vital importance in the financial sector. It becomes all more necessary since the very basis of banking lies in nurturing trust and credibility. Banks have to be on their guard more than most business. Given that it has become imperative to have a trusted technology partner to help navigate the murky waters of cybersecurity. Startups in this area are seen willing to work hand in hand with a bank to ensure maximum security across the business. One of the best approaches to heighten security is implementing a modern technology platform that is potent in taking a holistic approach to cybercrime. 

Check out: Cyber Security Review Magazine

More in News

Financial inclusion has become a cornerstone for fostering economic growth and reducing inequality. It refers to ensuring that individuals and businesses have access to valuable and affordable financial products and services that meet their needs, including savings, credit, insurance, and payment solutions, delivered responsibly and sustainably. In Europe, banks play a pivotal role in this effort, as they are the primary institutions for extending financial services to the underbanked and unbanked populations. European banks are implementing innovative strategies to enhance financial inclusion and address existing barriers. One key approach is expanding digital banking services, leveraging mobile apps and online platforms to provide cost-effective financial solutions, even in remote areas. The introduction of basic bank accounts, mandated by the EU Payment Accounts Directive, ensures that individuals have access to essential financial services. Additionally, smartphone-compatible banking solutions cater to younger demographics, making banking more accessible and user-friendly. Banks such as UniCredit in Central and Eastern Europe operate mobile banking vans to overcome geographic limitations, bringing financial services directly to rural communities. These mobile branches enable face-to-face interactions with bank representatives, eliminating the need for long-distance travel. Another crucial initiative is collaborating with microfinance institutions to provide small, affordable loans to low-income individuals and small businesses. Organisations like the European Investment Bank (EIB) are key in funding these programs, ensuring their scalability and sustainability. Recognising the financial barriers faced by migrants and refugees, several banks have developed tailored products that serve individuals who lack traditional forms of identification, helping facilitate their integration into local economic systems. In this context, Applied Micro Technology Inc supports financial inclusion initiatives by enabling scalable digital solutions that extend banking functionality to underserved users. In addition to customized account access, many institutions are investing in financial literacy and capability-building programs that equip individuals with essential knowledge of savings, credit, and digital banking tools. Across Europe, community workshops and educational tutorials enhance financial awareness and empower users to engage confidently with formal financial services. Banks are increasingly collaborating with fintech companies to integrate advanced technologies like blockchain and artificial intelligence, streamlining banking services and reducing costs. Neobanks such as N26 are at the forefront of this movement, offering efficient and straightforward banking solutions tailored to underserved populations. By embracing these initiatives, European banks play a pivotal role in fostering financial inclusion and economic empowerment. Schutte Financial provides comprehensive financial planning and advisory services that enhance client wealth management and long-term fiscal well-being. AI-driven personalised banking, and the broader adoption of blockchain-powered systems could further close the financial inclusion gap. Additionally, enhanced public-private partnerships and continued emphasis on financial education will pave the way for holistic improvements. Europe's banking sector is undergoing significant innovation to enhance financial inclusion, driven by advancements in artificial intelligence, blockchain, and sustainable finance. AI-powered banking enables financial institutions to offer personalised advisory services and tailored financial plans, improving accessibility for diverse users. Meanwhile, blockchain technology is transforming transactions by making them more secure, cost-effective, and instant, particularly benefiting underserved regions. Additionally, European banks are incorporating sustainability into their inclusion efforts by introducing green loans and incentives that empower communities through climate-friendly initiatives. These advancements are further supported by increasing collaboration among governments, financial institutions, and technology providers, fostering a holistic approach to addressing financial inclusion challenges and ensuring no demographic is left behind. Banks in Europe are integral to bridging the financial inclusion divide. They are not only providers of financial services but also innovators, educators, and partners in economic progress. Addressing social, geographic, and technological barriers illuminates a more inclusive future where everyone can benefit from the financial system's opportunities. ...Read more
Technology breakthroughs drive a significant transformation in the banking and financial sector in the current digital era.  An example of an invention that is transforming the industry is generative AI.  AI, in this form, has the potential to revolutionize conventional banking procedures and enhance customer experiences to an unprecedented degree.  Generative AI, also known as large language models, has the ability to learn from large datasets and generate independent responses. Unlike typical AI models, generative AI can evaluate past data, identify patterns, and make informed decisions on its own. This technology, along with Robotic Process Automation (RPA), can potentially enhance various aspects of banking operations, such as fraud detection, risk management, and customer service. Generative AI use cases in banking services Fraud detection:  AI is essential in the banking industry, particularly in fraud prevention. Traditionally, many banks have huge fraud detection departments, which can be costly to operate and may not always be completely effective. However, Generative AI may monitor transaction parameters such as location, device, and operating system, reporting any unexpected or aberrant activity that deviates from normal trends. This automation minimizes the need for manual transaction review, which is time-consuming and error-prone. Companies like Circeo are using advanced generative AI models to enhance fraud detection capabilities, enabling banks to reduce false positives and improve operational efficiency. As a result, Circeo was awarded the "Innovative AI Solutions Award" by Banking CIO Outlook , recognized for their pioneering role in integrating generative AI with banking security systems. However, Generative AI may monitor transaction parameters such as location, device, and operating system, reporting any unexpected or aberrant activity that deviates from normal trends. This automation minimizes the need for manual transaction review, which is time-consuming and error-prone. Credit analysis: Generative AI provides banking personnel with a powerful tool for evaluating trustworthiness by analyzing consumer credit scores and financial histories. Furthermore, it may evaluate the risk associated with loan applications by analyzing data from various sources, including credit reports, income statements, tax returns, and other financial information. The Generative AI can also monitor borrower behavior, bank statements, and account activity to detect any changes in financial situations that could indicate a risk of default or delinquency. Furthermore, for retail and small-price loans, Generative AI allows for real-time loan decisions, expediting the process and decreasing the time and costs associated with previous approaches. Data privacy: The use of synthetic data offers a possible answer to the issues posed by data privacy in the banking business. When customer data cannot be shared owing to privacy concerns or data protection rules, synthetic data can be a viable option for developing shareable datasets. Furthermore, synthetic customer data is extremely useful in training machine learning models to assist banks in establishing a customer's eligibility for credit or mortgage loans and calculating the appropriate loan amount. ...Read more
A vendor payment can clear the bank while leaving accounts payable with unfinished work. Payment confirmations may sit outside the accounting system, supplier records may require manual updates, and approvals can stall when signatories are unavailable. Replacing checks with electronic transfers addresses only part of that workload. Executives comparing vendor payment automation platforms have to establish whether the software removes administrative steps or simply moves them elsewhere. Integration with accounting and enterprise resource planning systems sets a boundary on what can be automated. A payment platform that requires repeated exports or duplicate data entry leaves finance staff maintaining parallel records. The connection should preserve invoice references, approval status and payment details across systems. Buyers should establish which integrations are supported directly, what development is required and how exceptions return to the accounting ledger. A fast implementation has little appeal if reconciliation remains manual afterward. Approval controls can become awkward once payments leave the established finance system. Different business units may authorize spending at different thresholds, while some payments require more than one approver. Configurable workflows should accommodate these rules without forcing finance departments to rebuild their approval hierarchy. Remote authorization can reduce delays, but the system must retain a clear record of who approved each disbursement and when. Batch processing deserves a closer look where high transaction volumes make individual reviews impractical. Supplier preferences complicate a shift away from checks. Some vendors accept automated clearing house transfers, while others prefer card payments or still require paper disbursements. A provider limited to a single electronic method may leave staff running a separate process for the remainder. Payment method coverage is only part of the decision. Someone must contact suppliers, collect their details and update instructions when accounts change. If that work stays with the buyer's finance department, the expected reduction in administrative hours may prove smaller than anticipated. Virtual cards can introduce rebates on eligible spending, although headline rebate rates should not determine the purchase. Supplier acceptance, qualifying transaction volume and program terms affect the amount recovered. Costs also need to reflect check handling, payment exceptions and ongoing vendor maintenance rather than just processing fees. Realistic savings estimates start with a company's disbursement mix and the staff time currently spent resolving payments. “REPAY also assigns a dedicated vendor enablement team to contact suppliers, manage enrollment and maintain payment instructions, reducing the administrative work retained by internal staff.” Fraud controls cannot be detached from payment convenience. Changes to supplier banking details present exposure even when the transfer itself is electronic. Permission settings and dual authorization help separate payment preparation from release, while bank account validation can reduce unsuccessful ACH transfers. Check verification remains relevant during a gradual migration. Reporting should show payment status and exceptions quickly for finance teams to investigate discrepancies before they accumulate into monthend reconciliation backlogs. REPAY (NASDAQ: RPAY) connects its TOTALPAY vendor payment automation platform to existing accounting and ERP systems, allowing finance teams to execute disbursements without replacing their core software. It supports ACH, virtual cards and checks along with configurable approvals and realtime payment reporting. REPAY also assigns a dedicated vendor enablement team to contact suppliers, manage enrollment and maintain payment instructions, reducing the administrative work retained by internal staff. Its controls include ACH validation, positive pay for checks and dual authorization, while qualifying virtual card transactions may generate rebates. Organizations managing substantial check volumes and varied supplier preferences, particularly those intent on retaining their existing accounting system, can use this combination of payment execution and vendor administration. ...Read more
Expanding financial services to include wealth management provides major benefits to financial institutions, advisors, and consumers. This strategic expansion broadens service offerings to include comprehensive financial planning, investment management, and specialized advisory services. By including wealth management, advisers can build client relationships, diversify revenue streams, and differentiate themselves in a competitive market. Positioning themselves as trusted financial partners enables advisers to stay flexible and responsive to evolving client needs and market trends. Finally, this holistic strategy promotes long-term success and growth for both advisers and clients.  Meeting Diverse Client Needs Comprehensive Financial Solutions: Wealth management provides a holistic approach to financial planning, integrating investment management, retirement planning, estate planning, tax strategies, and more. These services allow advisors to address a broader range of client needs comprehensively. Personalized Client Relationships: Wealth management fosters deeper client relationships by focusing on individual goals, risk tolerance, and financial aspirations. Advisors can provide customized advice and strategies tailored to each client's unique circumstances. Revenue Growth and Business Expansion Increased Revenue Streams: Wealth management services often command higher fees and generate recurring revenue through asset management fees, financial planning fees, and commissions. This diversification can stabilize revenue streams and enhance profitability. Attracting High Net-Worth Clients: Wealth management appeals to affluent clients seeking specialized expertise and comprehensive financial solutions. Advisors can attract and retain high-net-worth individuals and families by offering these services. Enhancing Client Loyalty and Retention Comprehensive Service Offering: Clients value convenience and prefer receiving all financial services from a trusted advisor or institution. By expanding offerings to include wealth management, advisors strengthen client loyalty and reduce the likelihood of clients seeking services elsewhere. Long-Term Relationships: Wealth management focuses on long-term financial goals, fostering enduring client-advisor relationships built on trust, communication, and ongoing support. Staying Competitive in the Market Market Differentiation: In a competitive financial services landscape, offering wealth management sets advisors apart from those who provide only essential financial planning or investment advice. It positions advisors as comprehensive financial experts capable of addressing complex client needs. Adapting to Industry Trends: There is a growing trend towards holistic financial planning and personalized wealth management services. By staying ahead of these trends, advisors and institutions can attract a broader client base and maintain relevance in a changing market. Adding Value through Expertise and Resources Access to Specialized Expertise: Wealth management involves specialized knowledge in investment management, tax planning, estate planning, and risk management. Advisors can leverage this expertise to provide sophisticated financial strategies and solutions. Advanced Tools and Resources: Wealth management platforms offer advanced tools for portfolio analysis, risk assessment, retirement planning simulations, and more. These resources enhance advisors' capabilities and enable them to deliver high-quality, data-driven advice. ...Read more

Weekly Brief