The World Economic Forum has created an industry group tasked with upgrading the cybersecurity of financial technology companies, as partnerships between FinTechs and traditional financial institutions (FIs) increases.
According to news from Reuters, citing the World Economic Forum, the new consortium will bring together some heavy hitters, including Citigroup, online lender Kabbage, the Depository Trust & Clearing Corp, Zurich Insurance Group and Hewlett Packard. The group plans to develop a framework to ascertain the security of FinTechs and data aggregators.
The move aims to fortify companies against cyberattacks by hackers who have increasingly targeted the financial services industry, including FinTechs. After all, financial firms handle a ton of money and data on any given day. It also comes as traditional financial firms are deciding to partner up with various FinTech players, which have been encroaching on their business. Banks are joining forces with FinTechs to remain competitive or are sharing data following new international rules and regulations, such as the European Union’s Payment Services Directive.
“Many partnerships are forming between financial technology companies and incumbent institutions,” Matthew Blake, head of the Financial and Monetary System Initiative at the World Economic Forum, said in an interview with Reuters. “Through those linkages, there is a potential introduction of risk.” As a result, he said, FinTech companies must install stringent cybersecurity safeguards.
The creation of the industry group dovetails with a new report from the World Economic Forum that states better cybersecurity assessment tools are needed to solve the security challenges created by FinTechs. According to Reuters, the report from the World Economic Forum said robotics and biometrics increase the amount of consumer data that is at risk to hackers.
The new group will be managed by the World Economic Forum and will work with its new Global Centre of Cybersecurity. The two will create a point system to score the cybersecurity of FinTechs.