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The World Economic Forum (WEF), incumbents Citigroup, the Depository Trust and Clearing Corporation (DTCC), and Zurich Insurance Group, along with alt lender and tech supplier Kabbage, have formed a consortium dedicated to improving cybersecurity standards across the fintech startup space.
The consortium was formed in response to a recommendation in a new WEF report on how to address the risks of increasing technology use in financial services, especially as incumbents and fintechs enter into ever-more partnerships. The group's first step will be to create a set of criteria to assess the robustness of fintechs' cybersecurity protocols, and a set of cybersecurity standards for startups to pledge to adhere to, both of which are expected to be drawn up in the next six to 12 months. The group will be managed by the WEF.
Goal - Incumbents - Fintechs - Innovations - Risk
The goal is to help incumbents leverage fintechs' innovations without incurring excessive risk. Incumbents stand to gain by being able to more accurately assess the risk they expose their organization and clients to when entering into a partnership with a fintech to leverage its technology and intellectual property (IP).
Supply partnerships are becoming the predominant interaction model between the two camps, but incumbents express concern about exposing themselves to third-party risk by working with startups that don't face the same tough standards and fines as incumbent players, such as unregulated technology suppliers. This concern will only grow under GDPR, which will impose steep fines for lax cybersecurity.
Consortium - Incumbents - Fintechs - Survival - Economy
This consortium will help prepare incumbents and fintechs for survival in a digital economy. Studies and data sets are increasingly demonstrating that fintechs are engaging with incumbents as technology suppliers, so implementing measures that make such third parties adhere to a robust security standard more will help ensure that there are fewer weak links in the supply chain that open collaborators up to breaches,...
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