Digitalization is visible across most, if not all, spheres of our professional and personal lives. While it offers a number of undeniable advantages, it brings along the need for security, especially cybersecurity. Consider the following:

• An increasing number of devices are interconnected, communicating via the Internet
• Digitalization brings convenience but also collects data, with the potential for misuse

Implications of interconnected devices for companies.

This brings along implications for companies. They must protect themselves from cyberattacks, or else – for instance – hackers could take control of Internet-connected medical devices. This is but one example, and the vulnerable lot includes financial services firms, including those in the investment banking industry.

A good cybersecurity setup for this sector is difficult to determine.

Cybersecurity is hard to determine considering the constantly changing threat landscape, plus the effect of shifting business priorities and exponential technology forces on how organizations approach cyber risk management.

There is no denying, though, that the cloud, data and analytics, and social media are top of the list of technology items requiring attention at large firms.

Look what large enterprise banking spend on cybersecurity

The criticality of cybersecurity is borne out by budgets for the same. The largest budgets of course belong to Fortune 500 companies. Within the Fortune 500, financial institutions appear to have the deepest pockets. JP Morgan Chase & Co, as per a 2018 letter to its shareholders, spends roughly USD 600 million annually on cybersecurity. They also employ around 3,000 IT security people.

Media reports have suggested that Bank of America spends roughly the same amount on cybersecurity.

It is thus no surprise to see the number of financial institutions posting job ads for cybersecurity positions. Given how cybersecurity covers a broad range of issues and security breaches are quite common, the pool of investment banking professionals must also include tech-savvy information security personnel to protect their online systems.

Why are banks a cybersecurity risk?

Why, though, is Wall Street at such risk? According to Moody’s, the capital markets businesses of banks “are an appealing target for cybercriminals attempting large-scale theft or launching sophisticated attacks to create operational disruption.”

Companies in the investment banking industry also house other attractive “targets”, such as payment and cash management systems, and data of their high-net-worth clients and retail banking private clients. Cyberattacks have many purposes:

• Stealing money
• Extorting ransoms
• Stealing or manipulating data
• Creating significant operational disruption
• Generating negative publicity

The attacks themselves can take many forms across a wide range of channels. A typical attack is perpetrated by a criminal in a remote, safe location, trying to get into the systems of a bank or of its clients. Other attacks include attempts to divert payments into the accounts of criminals.

Fraud is very closely linked with cybercrime, and so are the methods employed by investment banking professionals to fight the two.

Investment Banking

Because of the nature of its work, the investment banking industry offers a number of targets for attacks and fraud. These include the following:

• Pending mergers and acquisitions (M&A) transactions: Business negotiations for M&A deals include some very valuable information attractive for attackers, especially for industries such as pharmaceuticals, biotechnology, and medicine.
• Mobile computing devices: Given how many activities of investment banks happen through such devices, they are often targeted to get unauthorized access to client or management accounts.
• Insider trading: The fact that people working at investment banks are privy to confidential information means they can also facilitate cybersecurity breaches. Interestingly, some analysts also speculate there could be a correlation between such institutions hiring cybersecurity professionals and the increased instances of breaches and insider trading attacks a few months later.

What does a successful cyber attack do?

The impact of a successful cyberattack could be wide-ranging for the work of investment banking professionals, with effects in financial, regulatory, and reputation terms. A challenge in this regard comes from the number of ‘false positives’ that could arise and unfortunately, are not possible to eradicate completely.

The only way out is to keep working on rules to detect such instances and thereby reduce their occurrence. The rules need to become more accurate and efficient, and artificial intelligence (AI) and machine learning (ML) could be of great help hereby, for instance, scanning for a change in client behavior or for suspicious IP addresses.

Compromised data can also affect the bottom line. Details of an ongoing deal could be manipulated or transferred, thereby damaging share prices of involved companies involved.

New cybersecurity technology

The solution is for the investment banking industry to invest in new cybersecurity technologies. Investment banks must encourage proper procedures to remove human errors, negligence, or failure to follow security protocols. Some key aspects are as below:

• Huge amounts of data: With larger amounts of data being collected, processed and analyzed for decision-making, every aspect of data collection and management must be secured.
• Autonomous devices: Do not miss out on security for sensors and smart meters. Watch out for physical tampering, unauthorized access, and other attempts to affect data integrity.
• Internet of Things (IoT) security: Data assurance programs must establish end-to-end security for IoT data.
• Hire the right people: This implies hiring sufficient staff to implement and monitor security measures, as well as ensuring they are trustworthy.
• Keep clients and staff informed: These entities must be informed about the risks of phishing attacks, social engineering, and others.

The way ahead is clear. Security measures and awareness along with effective regulation are imperatives to mitigate the risks and effects of cyberattacks in an industry as critical as investment banking. Given the sensitivity of information here, the monetary and reputation damages could otherwise be very serious for the business.

The post The Importance of Cybersecurity for the Investment Banking Industry appeared first on ReadWrite.

As we enter 2020, the Banking and finance industry have already come far — from open trading at physical exchanges to algorithmic trading. We’ve gone away from paper savings accounts to robo-advisors. Here are the top investment banking trends to watch out for.

  Borrowing from Bob Dylan, the times are a-changin’

The current crop of technologies — cloud computing, social media, AI, machine learning, e-commerce, big data — all these are redefining this century and beyond.

Tech innovation in every industry has become an inseparable cocktail, and it’s especially true for financial institutions. Nowhere has this combination been as powerful as in the investment banking industry.

Holding companies, today, are looking for an intersection with technology. Navi Technologies, formerly known as BAC Acquisitions, an investment holding company, is scouting for investment opportunities in technologies to augment financial services.

What do these developments bode for investment banking professionals and the markets of the future? Here we look at the critical juicy investment industry trends you need to keep up with.

Significant 2020 Trends to watch out for, that are changing the Investment Industry landscape.

1. Mid-Sized Companies become the spicy target.

Goldman Sachs recently announced its plans to boost investment in mid-sized corporate clients. Though the investment banking industry behemoth has been serving mid-sized companies, it was done on an ad-hoc basis in the past.

It plans to go full-scale with a cross-market group (CMG) that is set to deliver investment banking products to mid-sized companies. David Solomon, the chairman, and CEO of the US bank says,

There are many enterprises valued at $500 million to $3 billion. That’s the real expansion opportunity for the firm.

As a result of this focus on emerging private companies, the number of investment bankers and M&A deal-makers hired for the operations will witness a rise, along with a spike in the number of regional units.

Other than Goldman, there are many other banks eyeing this segment, including JP Morgan, Wells Farago, Citigroup, among others.

2. Rise of Initial Coin Offering (ICO).

It’s a new way to raise funds. Initial Coin Offering (ICO) is the cryptocurrency equivalent to Initial Public Offering (IPO) in investment banking. It offers the means for cryptocurrency-based corporations to raise funds for their new application, service, or a new digital coin.

Investors buy in these offerings and receive a cryptocurrency token by the offering company in the hopes that successful projects will lead token’s values to spike.

The Economist, a popular finance publication says this about ICO,

They are digital coupons that can be readily traded, although unlike shares, they don’t confer ownership rights.

Among the successful coin offerings, Bancor’s story is worth noting. Bancor is a blockchain-based prediction market that was a substantial hit due to its unique offerings. Bancor generates liquid tokes that allow for their conversion into other tokens.

For instance, a user can purchase a Bancor token that may be a 50% combination of Ether and 50% Litecoin. It drew attention, and eventually, a buy-in from a venture capital firm ‘Blockchain Capital’ and one of the earliest internet investor Tim Draper.

Storj is another blockchain-based cloud storage company that successfully exploited ICO.

To engage in ICO, you will need to develop a basic understanding of cryptocurrency wallets and engage in digital currencies.

3. Assets of ‘Robo-Advisors’ will hit the US $2 trillion in 2020.

Many investment banking advisors, stockbrokers, and other financial professionals have lost a portion of their business to robo-advisors. An example of this trend is Betterment. Robo-advisors are algorithm-driven advisors that work with little to no human intervention.

A company’s hallmark is the ease of online access provided to the clients. It is especially becoming popular among young investors and the digitally savvy new generation consumers.

A typical robo-advisor collects client information about their financial health and future goals. The robo-advisor then uses that data to advise clients and automatically invest their assets.

Some of the best robo-advisors can set up accounts with ease, robustly plan goals, provide account services, manage portfolios, and offer security features at a very low fee.

First, robo-advisor at Betterment was launched way back in 2008. After a decade, the robo-advisor’s at Betterment have today become capable of handling complex tasks like investment selection, retirement planning, tax-loss harvesting, and much more.

The growth of robo-advisors hit (in terms of client assets managed by them) US $60 billion in 2015, and the industry is projected to rise to the US $2 trillion in 2020, and an estimated US $7 trillion by 2025.

4. 5G and BFSI (banking, financial services, and insurance).
   

The age of hyper-connectivity with 5G will also change the dynamics of finance, insurance, and investment banking industry. As the devices become smarter and faster, the services offered will too.

The years upon us now may be the time of the “Intelligence of things” where updated smart finance applications will use 5G. A vast network of devices and over 20 billion items, from dryers and cars, to bank accounts and investment portfolios, will become interconnected in this 5G revolution.

The enormous data generated in the process is poised to make investment decisions better and smarter.

5. Making “Perfectly efficient markets” with AI.

Talking about the future of stock exchanges, Adena Friedman, the CEO of NASDAQ, says we will get closer to perfectly efficient markets. The continued march toward AI can enable the investment banking industry to make better decisions through the barrage of data generated. Friedman says, as the data gets piled over the 10 to 20 years, quantum computing will lend the investment industry the ability to look at thousands of outcomes within seconds and draw right conclusions – about price, buying and selling, and much more.

AI tools can root out bad behavior – insider trading, market manipulation, and all that makes markets unfair.

In the AI space, NASDAQ plans to provide technology tools underpinning capital market data and insights to other exchanges, regulators, and broker-dealers. The hope is to power the investors across capital markets with AI.

6. Equity Crowdfunding is a reliable mode of alternative investment.

Equity Crowdfunding is about the online offering of private company securities like debt, shares, convertible notes, etc. to a group of people. The reliable mode of Crowdfunding has become a popular method of raising funds for private companies and startups. Small business owners provide information about their funding needs and business on these websites and solicit financial pledges from people.

Many investment banking professionals have proceeded to launch their equity crowdfunding platforms. Indiegogo and Kickstarter are among the most popular crowdfunding arenas. Kickstarter is the best fit platform for creative professionals looking to raise funding for their projects. Indiegogo, on the other hand, help technology firms to get their products off the ground.

Equity crowdfunding, unlike traditional product crowdfunding, offers real equity in companies to the investors.

GoSun, GOffee, and Miso Robotics recently launched their equity crowdfunding campaigns. This mode of funding gives better flexibility to the company owners than the traditional venture capital route.

7. Need for Coding skills.

Investment banking professionals will be required to understand and know the technology behind algorithms, as more operations shift toward that. Banking, Finance, and Insurance industry has already begun to ramp up their hiring of IT professionals in the bid to have an in-house IT and data team.

Whether you be in banking, portfolio management, risk management, or other field of finance, you will be expected to be able to program at least in one programing language.

Stock picking used to be a coveted skill, but now investors are no more focusing on it. Passive funds run on autopilot are automating the process of stock picking.

8. Cybersecurity and Investment Banking.

The past year and coming years will be significant for the confluence of cyberspace, and investment banking from a cybersecurity standpoint. Other than corporate ventures of the likes of Google and Cisco, financial services companies like JPMorgan Chase are ramping up their investment in security startups.

In 2019, investments in cybersecurity were worth over US$23 billion, and the spending in this industry is expected to reach US$151.2 billion by 2023.

These are the key trends for the banking and finance industry for 2020, and an overview of what the investment industry is taking ahead from previous years and decades.

The post 2020s: Top Investment Banking Trends to Watch Out For appeared first on ReadWrite.

The Internet has entrenched into our lives like the oxygen we breathe in the air. We are dependent on it for almost everything from grocery shopping to finding our way on the roads. Not forgetting the daily social interactions, we have on it.

Picture this…

According to the Global Digital 2019 Reports, there has been a steady growth of internet users by an average of more than one million new users every day. Currently, there are more than 4 billion active internet users currently in 2019 – which comprises more than half the world’s population. In addition, globally an average person spends about 6 hours and 42 minutes online every day.

The hyper-connected society: Pros and Cons

The benefits are plenty to be connected both for businesses and individuals.

• Increased productivity
• Hassle-free social interactions
• Last but definitely not the least reduced effect of distance and borders on both communication and finance

What was the disadvantage in this highly connected society? Or rather what was wrong in this super-connected society?

The loophole… this connectedness came with a huge price. And the price was – our personal data like identities, financial information, addresses, and even life events became public or were leaked online.

Read this…

• The company, Purplesec reported that an organization bears about $2.4 million as the cost of malware attacks.
• An investment of $1 trillion in cybersecurity between 2020 and 2025 is predicted by IT analysts in order to rule out malicious cyber threats.
• According to the 2019 Global Risks Report, cyber-attacks contribute about 80% disruption of operation and infrastructure and data theft contributes about 82%.

Do you think there is a link between all these increased rates of cybercrimes and hyper-connectivity? Of course, there is a connection. While the world shrunk with the ever-evolving technology, the cybercriminals became smarter and found out new ways to hack the data. However, as there are two sides of a coin, the emerging technology also helped organizations and individuals to fight for data sovereignty.

But where does Blockchain fits into all this…

Blockchain with its unique features like immutability, decentralization and P2P network is a technology, which will be able to stall growing cybercrimes and prevent financial losses owing to these crimes.

Interested to know more? Keep reading how…

1. Decentralization of data: The main reason hackers had a field day till now is that all the sensitive data was centralized or stored in one place. Blockchain with its unique decentralization feature ensured that all the sensitive data was stored at different computers located in different areas. This data then can only be accessed through a cryptographic key, which is available with the members of that blockchain.

Benefit: Hackers don’t have a single point to steal the data, as it is securely stored on different computers. Symantec reported a huge reduction in cryptojacking by 52% with the help of Blockchain. A huge success to block ransomware to reduce cybercrime.   

2. Blockchain makes IoT safe: When cybercriminals attack they target basic devices like routers, cameras, thermostats because these are vulnerable to attacks. According to a Symantec report, about 90% of the cyberattacks are due to infected devices connected by the Internet of Things. However, with Blockchain technology, the information passed through these devices could be stopped on a hint of suspicion.

Benefit: With the creation of a decentralized flow of data, it is nearly impossible for hackers to breakthrough.

3. Private messages are secure with Blockchain: Your data is not safe on either public sites or the other sites where you may login for online socialization. If you regularly tweet at Twitter then remember that even your twitter handles are not safe, as there are malicious software lurking in the corners that steals the information. Love online shopping? Beware as E-Commerce is the most unprotected platform from such malware.

Customers’ preferences, shopping behavior are all extracted from the metadata – that can be stolen. Blockchain by encrypting the messages and securing each node adds a security layer on all the data/information including the ones on different platforms.

Benefit: The decentralization feature of Blockchain ensures that all the information is safe and keeps social media sites connected.

Organizations like IBM have invested about $200 million in Blockchain and about $2.1 billion has been shelled collectively in Blockchain by tech firms globally.

These are some of the ways Blockchain can boost cybersecurity for organizations world over. And if the reports are to be believed then about 75% of the CEOs have prioritized their investments in Blockchain technology, as it has become a revered name in cybersecurity.

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