The banking industry is under attack from many angles, not just from traditional risks but also new uncertainties, according to the latest CSFI/PWC survey. Regulation remains at the top of the list of concerns while the sharpest rise in concern is about criminality, including the risks to banks in areas such as money laundering, credit frauds, tax evasion and cyber attack. This risk coupled with continued concern on technology risk, as per the survey findings, where underinvestment and obsolescence, as well as the boom in new “fintech” present major challenges to banks.
Cyber threats and money thefts globally are now the top of concerns for the bank CEOs. These two new endemics are not only stealing money from cash vaults through credit frauds and looting cash from ATM booths through skimming but also giving rise to new competitors of bank CEOs who are challenging traditional ways of doing things and operate usings more nimble systems and lower overheads. So, cyber security has become a business risk, rather than simply a technical risk” for the banks as hacktivism is changing the threat landscape. Groups like Anonymous are increasingly targeting big banks, and their attacks are not always financially motivated. So regulators around the world are waking up and proposing stricter banking rules and some governments are even pursuing penetration testing, also referred to sometimes as “war games,” to help strengthen the defenses of their most valuable banking institutions.
In Bangladesh, banks and financial institutions are clearly in the firing line and are prominent targets for hackers and frauds, when most of them are crippling with high bad assets and higher compliance cost amid low margins and lower profits. The Hall Mark Scandal, Bismillah Group and Basic Bank scams, ATM skimming incidents from some bank booths is a cautionary signal to the operators and the recent attack on SWIFT system to steal money from Bangladesh Bank (BB) is the final warning to the regulators. The BB, however, under the leadership of the new BB governor Dr Fazle Kabir has begun a war against thefts and threats. He has already declared a war strengthening his defensive measures, redesigning risk management policies and finally sharpening monitoring tools and supervisory knives to combat thefts and threats in banking. Here, the roles of bank CEOs are crucial. The real challenge for all is to show by the deeds, and not just their words.
So the questions for the winning CEOs are: Where lies the greatest need for proactive risk assessment? Is mobile merchant payment the next major battleground for digital financial services providers? Beyond risk, what other areas are to be highlighted to win the battle? The Big Question to all is how banks and FIs can prepare themselves to fight under the new regulatory sword? And the Top Question is: Where do bank CEOs stand in the battle?
