HK banks in tug-of-war between innovation and cybersecurity

Panelists debated on cybersecurity VS business innovationIs cybersecurity a hindrance to business innovation? The debate continues as Hong Kong’s financial services industry grapples with technology disruptors that are fundamentally changing the way new banking services are delivered and consumed.

Panelists at the 4th Symposium on Risk Management shared varying viewpoints to shed light on the subject that divides many among the banking and IT sectors.

Cybersecurity – a driving force for innovation

“Cybersecurity, at least in the banking industry, is a driving force for innovation,” Michael Leung, chief information & operations officer at China CITIC Bank International. “It is exactly new innovations like P2P payments, which will help us contain and deal the cybersecurity.”

He pointed out that security is a basic requirement for every new digital service. But the proper balance must be achieved so that security does not get in the way of innovation.

“The banking industry is one of the most regulated industries. But don’t forget there are other things in the equation: one is customer expectation and the other is competition.

“We are always juggling three key components – the value to the customer (which includes ease of use), the cost to the bank and the risk - which includes operational and technology risks. To us cybersecurity is part and parcel of the entire development cycle. If you want to get pass the regulators, all the security components have to be there. It is not negotiable.”

Hong Kong IT legislator Charles Mok, however, said cybersecurity can inhibit the adoption of new technologies, in the sense that it gets the blame when things go awry.

“Even if you innovate, when something bad happens then people will not use your service again. It is one example of how cybersecurity is often taken as an excuse by a lot of people [for not using a new technology].”

He also added an observation that security concerns are unlikely to deter most companies trying to push out innovative products and services.

I think the biggest problem is that cybersecurity is always an afterthought and is given a lower priority,” Mok said.

A different mind set

People who are building innovative things typically work with an engineering mindset, according to Michael Smith, chief technology officer for security at Akamai.

“Honestly with any new technology that comes around, the first iteration of it you built functionality.You don’t worry about security or safety or anything like that. You want the core functionality done first, and then you fix any vulnerability in generation 2 of the technology. By version 3, you have largely addressed most of the security issues.”