July 10, 2016

Industry Disruption Analysis: A Role for Risk Management

Rarely have we had to anticipate the disruption of whole industries. Normally, disruption applies to the competition between an incumbent and a new entrant, typically one with lower priced, lower quality goods. This disruptive innovation model is burned into many people’s imaginations. It is also why banks have become obsessed with fintech. What Kallasvuo describes, however, is profound change in the very structure of economic activity. These two elements combined — industry disintegration and the restructuring of global economic activity — are the next context for disruption. But how can we understand industry disruption, as opposed to firm-to-firm disruption?


Bitcoin Won't Disrupt Payment Networks, but Changes Are Coming

Citi believes digital currencies could improve settlement speeds, but they require a widespread acceptance that is unlikely. Using currency as a bridge asset slows settlement since it necessitates re-entering fiat rails. Scalability is a major issue for cryptocurrencies as they can only process a limited amount of transactions. Efforts to increase scalability could undermine security features that prevent double spending. Resiliency is another factor. Existing systems are time tested. Bitcoin has only existed since 2009. Regulation is also a factor. A new system will require major efforts to verify regulations to protect consumers. Bitcoin does not support chargebacks.


An Israeli startup is using the ancient art of military deception to trap hackers

Cymmetria puts decoy virtual machines on its clients' networks with real software and real information on them. They also leave "digital breadcrumbs" in other places like passwords and documents that might lead the hacker there to its platform, which is called MazeRunner. The clients know the decoy servers and how they normally behave, so when an attacker finds it and starts using it, they'll know something is up. The same goes for any of the breadcrumbs left, which a normal user on the network would never access. A military unit might set up an ambush to take out its deceived enemy, but hackers who find Cymmetria decoys are neutralized and taken off the network - along with whatever tools and techniques they want to use later.


New Beginnings on Old Bedrock: Linking Mainframe to Big Data

Big Data platform ITOA solutions and business analytics are now the norm. Although the market is evolving quickly and requirements are changing, everyone is doing it. Those who still think it’s still just talk are missing out big time. Most of these initiatives are not started by Mainframe IT, but in companies with mainframes, the enterprise teams are now at the point of implementation where they realize that they need the mainframe data for an effective or complete solution. The broad uses cases that we see include things like real time monitoring of infrastructure or business services, and real-time awareness of access activity to help spot breaches in security or compliance. What these cases, and others, have in common is a deeper contextual analysis that is impossible with traditional, point monitoring tools.


How Data Is Transforming the Health Care Industry

Apps can be used to measure how far people walk in a day, or how many calories they burn or exercises they complete. Digital systems can make it easier for people to eat a healthier diet, and to monitor their blood pressure, weight, heart rate, sleeping patterns, insulin levels, and more. Such data can then be tracked, compiled, analyzed against the results of others, and sent to doctors and other practitioners for monitoring. The information can be used to glean a comprehensive picture of an individual patient’s current health and risk factors. This, in turn, makes it easier for workers to diagnose ailments, and to draw up a tailored health care plan. Predictive modeling can take place too, in order to identify patterns or potential issues that emerge during comparison of one person’s medical files against thousands of other patients with the same genetic factors, condition, and/or lifestyle.


The pivotal role of CIOs in digital readiness: Three principles

Giving responsibility for the enterprise's digital readiness to the CIO, or to any other C-suite role, falls into the same trap as recruiting a CDO. But that's not to say that CIOs don't have a huge contribution to make. CIOs should help their companies define and create frameworks to guide digital initiatives and prepare IT teams to provide support. ... Traditional collaboration processes are typically structured around a single point of contact, such as a business relationship manager, but this setup prevents business leaders from easily accessing the IT expertise they need. Our research at CEB shows that 78% of business leaders want direct access to broader and deeper expertise in IT, so it's no surprise that CIOs are looking for ways to make IT's expertise more accessible and flexible.


Cybercrime Surpasses Traditional Crime in the United Kingdom

The report notes how cybercrime has surpassed normal or traditional crime, in terms of impact. The UK’s Office of National Statistics included cybercrime for the first time in their 2015 annual Crime Survey of England and Wales. The survey estimated that there are 2.46 million cyber incidents and 2.11 million victims of cybercrime in the UK last year. Computer misuse and computer enabled crime accounted for 53% of all crime in the UK in 2015, making it larger than all other kinds of crime. ... Trend Micro actively encourages victims of cybercrime to report these crimes to their local law enforcement or national fraud reporting service, if one exists. If your house was burglarized, of course you would report it. When an attacker uses malware, phishing, and other attacks to steal data from your computer or money from your accounts, why would things be any different?


The Future of Digital Banking is Now

Despite the aggressive competitive environment, the vast majority of fintech firms lack scale and market awareness. While part of this can be attributable to a lack of successful marketing by all but a few of the new entrants, the major hurdles for fintech firms include a lack of capital, no legacy customer base, the trust level afforded legacy financial organizations and the understanding of regulatory and compliance issues by traditional banking firms. As a result, many fintech firms (and legacy banking organizations) are pursuing partnerships. “The fintech companies have the advantage in terms of speed, agility, and the capacity to understand and quickly build a very good user experience. However, they don’t have the legacies that banks have and they have a completely different mindset ...” says the report.


Banking on the Internet of Things: More than Restocking Fridges

"In this connected world, with the proliferation of mobile devices and things like wearables, it means banks have the ability to collect enormous amounts of data," said Geri-Lynn Clark, vice president and head of client services and partnerships at NextAngles, a compliance technology vendor that is part of IT services company Mphasis. "Fifteen years ago, banks would learn about their customers only when they had major financial events, like applying for a mortgage. But the ability to collect data now means banks can offer a much more personalized experience to their customers." Clark, who was the chief information officer for Citigroup's North American retail bank from 2004 to 2007, said the "banking of things" could be the most disruptive force in financial services since the advent of the credit card.


Digital in corporate banking reaches the tipping point

Competition from a cadre of nontraditional-banking entrants is also shaking up the status quo. Players such as Syncada, Ripple and Earthport are carving out a market niche in payments, trade finance, and enterprise-resource-planning integration. Others, such as Amazon and Kabbage, offer loans to small and midsize enterprises (SMEs), and companies such as Western Union and OzForex are gaining share in foreign exchange. Together, they are filling unmet customer needs for real-time, low-cost payments; integrated platforms that link to tax, reporting, and other systems; and quick pre approval and decision-making processes that make financing easier to obtain. Unchecked, their growth risks eroding trade finance and transaction-banking profits. Those slow to adjust may find themselves locked out of certain niches as fast-moving peers with innovative offerings corner lucrative market subsets.



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"If you don’t have some self doubts and fears when you pursue a dream, then you haven’t dreamed big enough." -- Joe Vitale