By Dickson Woo
Over the last decade, the banking, financial services, and insurance (BFSI) sector has undergone a sea change. Much like other aspects of our lives, technology has left an indelible mark on the processes and operations central to the BFSI sector. On the one hand, it has allowed the industry to grow its revenue streams and increase value, while on the other, it has changed how customers perform transactions and interact with businesses.
However, traditional financial services companies are still scrambling to compete with plucky, more tech-savvy upstarts despite the advancements. The comparative agility of fintech is not just allowing them to be more customer-centric but also innovate faster.
What can traditional BFSI players in Southeast Asia realistically do to keep pace with these new entrants, who appear to thrive in the face of technological disruption?
Future-Readiness Hinges on Being Agile and Responsive
Southeast Asia is home to some of the world's fastest-growing economies and attracts much attention from international investors. While there is no shortage of opportunities, the BFSI sector is widely expected to experience a weakening this year. In Malaysia, for instance, Fitch Solutions expects the banking system to remain stable over the coming quarters but that the outlook for banks will likely deteriorate amid rising interest rates and a slowdown in growth.
With global and domestic conditions becoming more uncertain, resilience through sturdy capitalisation and strong provisioning buffers will be vital in coping with the headwinds. However, this rests on continual innovation and transformation in the products and services delivered as well as in the very structure of the organisation itself. One of the most significant and challenging of these transformations in recent years has been the expanding role of IT within established financial services players.
While initially IT teams formed a comparatively small group that supported the business through maintenance of infrastructure and resources, they have now come to create a larger and even more integral part of the business. Through digital advancements such as the cloud and software-defined networking (SDN), IT is today an important revenue centre for many banks in Southeast Asia.
However, there is still much catching up regarding agility and responsiveness if established BFSI players want to create differentiated value, innovate faster and accelerate go-to-market. While cloud platforms serve as a bridge to modernise financial organisation workloads, regulators have sounded the alarm about concentration risks. In Southeast Asia, this is particularly complex due to the proverbial minefield that is its regulatory and policy landscape.
The key lies in differentiating through security and resilience, which brings us to weaving security into transformation, ensuring its inclusion from the very beginning and not carelessly implemented after services are launched.
Dealing with an Evolving Threat Landscape
Financial services institutions are faced with near-constant attacks and intrusion attempts. As a high-value target for cyberattacks, the BFSI sector – particularly traditional financial services providers – often struggle to pivot from a reactive cybersecurity stance to a proactive one. Adding to their tech deployments expands the attack surface, which makes finding a balance between security and network performance elusive. Neither can come at the expense of the other; data protection and regulatory compliance are less or more important than real-time access to offerings.
The BFSI sector must leverage a zero-trust approach and enable security-driven networking to achieve this. Attackers will find it harder to breach networks through a security posture that combines networking and security. Banks gain consistent enforcement across highly flexible perimeters through this next-generation approach while weaving security deep into the network itself. As a result, financial services providers can evolve, expand, and adapt their networks without the albatross of an expanded attack surface or security gap potentially harming the organisation.
Driving Innovation and Competitiveness via Cybersecurity
Today, the volume of cyberattacks is increasing in Southeast Asia due to terrifyingly sophisticated threats.
Protecting against these threats requires security teams to end their reliance on manual responses to incoming threats. This approach leaves the organisation vulnerable to being overwhelmed by the sheer number of alerts, while advanced threats moving at machine speed will also be too quick to be neutralised. Financial services providers also cannot discount the possibility of insider threats and must have the tools to safeguard the wealth of valuable data they hold.
To combat these threats, a two-pronged approach that targets malware and the attackers creating it is crucial. Financial services providers are equipped with robust, real-time threat intelligence through the attack-based defence. As a result, the BFSI sector – mainly traditional players – can focus on creating business value via innovation, customer centricity, and delivering new value propositions faster.
Dickson Woo is Country Manager of Malaysia, Fortinet.