As more and more companies begin to digitize operations to deliver a more efficient experience that also increases the ease of which clients can do business, online cybersecurity and fraud are on the rise. And unfortunately for business owners, these advancements introduce new risks that stakeholders must contend with.
In recent months we’ve seen a significant rise in cybersecurity issues and fraud, which can cost companies thousands if not millions. Here are three emerging trends in fintech that businesses should be aware of in order to best protect themselves against the inherent risks of digitization of operations, products and services.
1. New technology is forcing businesses and their financial service providers to adapt.
Cryptocurrencies and advances in blockchain are pushing some businesses to do what they have been avoiding for years: adapt to evolving financial technology. As more businesses adopt online processes, legacy practices, such as hand-writing paper checks or issuing paper statements, are becoming increasingly less efficient and less safe. For financial institutions, this technological pressure has significant and costly implications.
“What if your biggest client calls, tells you that they’ve had a ransomware attack and that they need bitcoin to pay the ransom?” asks Nancy McDonnell, head of treasury services at Texas Capital Bank. “We’re working diligently to evaluate this evolving ecosystem and determine how we as a financial institution can remain relevant and work as a true partner to our clients.”
2. Automation is empowering wider on-demand use of tech products and services.
The wide adoption within financial services of application programming interfaces (APIs), robotic process automation (RPA) and machine learning/AI is creating an increased need for accuracy, speed and convenience. This digitization is also presenting opportunities to circumvent potential errors, threats and complications that come with manual, human-led processes.
“As technology evolves, we should be evolving – not just within our business, but clients need to be ready and wanting to use new technology, too,” McDonnell says. “We’ve been working hard to evaluate every product and solution that we offer at Texas Capital Bank and make sure that we are offering the best and most-improved version.”
3. Digitization is creating a broader threat environment for old and new types of fraud.
While digitization and automation are beneficial for businesses for many reasons, both come with associated threats and risks. Recent ransomware cyberattacks on Colonial Pipeline and JBS in May 2021 are great examples in that they illustrate the necessity of putting preventative measures in place to proactively fight fraud, as well as having a clearly defined and organized response plan for when attacks actually happen. And even if you don’t think it could happen to you, heed this statistical warning from CNBC: Hackers target small businesses at least 43% of the time, and only 14% of companies were prepared to defend themselves. Smaller and mid-size businesses could actually be easier targets than larger ones, and the losses could be almost total.
“If a company is combining their banking partner and other service providers’ RPAs, APIs and AI technology into the holistic, enterprise level collection of data, then they will already be making calculated moves to be ready for potential treasury threats, risks and issues,” McDonnell says. “Companies and their financial services providers really need to be prepared with a team that is trained and experienced in preventative, responsive protocols – and running up-to-date technology.”
If your business could benefit from more strategic fraud protection, better treasury solutions or a team of experienced bankers that is committed to helping you grow and succeed, start a conversation with the team at Texas Capital Bank.
Texas Capital Bank Texas Capital Bank is a trusted financial institution focused on serving businesses and their leaders. In addition to offering guidance from experienced fraud personnel, Texas Capital Bank offers a wide variety of treasury solutions designed to minimize the risks of fraud and protect clients’ accounts. Member FDIC.