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DIGITAL BANKINGTRACKER™ HOW FIS ARE COMBATTING INCREASINGLY SOPHISTICATED ATTACKS OCTOBER 2018 FS-ISAC CEO calls for Square to add banking The top movers and shakers FI collaboration features to Cash in the digital banking space – Page 6 (Feature Story) – Page 10 (News and Trends) – Page 18 (Scorecard) © 2018 PYMNTS.com All Rights Reserved 1 DIGITAL BANKINGTRACKER™ TABLE OF CONTENTS What’s Inside 03 An overview of digital banking news, trends and stories surrounding the latest debuts and expansions Feature Story Turning To AI To Reduce Digital Banking Risks 06 Bill Nelson, CEO of the Financial Services Information Sharing and Analysis Center, on the increase in fraud targeting financial institutions and what banks can, and should, do to stop cybercrime News and Trends 10 Top digital banking landscape headlines, from new apps to trending features and technologies Methodology: 14 How PYMNTS evaluates various capabilities offered by B2C and B2B providers Top Ten Rankings 16 The highest-ranking B2B and B2C digital banking providers Watch List 17 Three additions to the Digital Banking Tracker™ provider directory Scorecard 18 The results are in. See this month’s top scorers and a directory featuring more than 230 digital banking players About 148 Information about PYMNTS.com and Feedzai ACKNOWLEDGEMENT The Digital Banking Tracker™ is powered by Feedzai, and PYMNTS is grateful for the company’s support and insight. PYMNTS.com retains full editorial control over the report’s methodology and content. © 2018 PYMNTS.com All Rights Reserved 2 What’s Inside AN OVERWHELMING MAJORITY OF BANK CUSTOMERS PREFER DIGITAL AND MOBILE EXECUTIVE INSIGHT BANKING OPTIONS TO BRICK-AND-MORTAR BRANCHES. What are some of the security challenges One recent study found that more than three-quarters associated with enabling digital banking of banking customers cite mobile banking apps as their services across multiple channels? preferred method of financial management. What’s more, these adoption rates are not solely powered by millennials and other young consumers — older “Every bank is now a digital bank. If a bank generations are also embracing these digital services. hasn’t adopted a strong digital strategy by More than half (52 percent) of all consumers over age 65 now, chances are they won’t be around much longer. But that doesn't mean that every bank is say they do most of their banking online, rather than at using its digital strategy in a way that puts its physical bank branches. customers first. The rise of challenger banks is one of the most interesting things to happen in But it isn’t just bank branches that consumers are the financial industry in a long time, for many moving away from. It seems human interaction with reasons. They have shown that customer banks is less popular than it once was, with 44 percent experience is about much more than a free of consumers expressing a preference for resolving toaster with the creation of a new checking issues or completing transactions by interacting with a account. It's about a seamless digital experience chatbot. between products, a frictionless ecosystem of payments and transfers and, most importantly, While young consumers are the most eager adopters of offering all of that without giving up ... security. this technology (two-thirds of users ages 18 to 27 prefer That's where Feedzai and our AI-powered fraud to communicate with a chatbot over a person), older prevention platform come in. Our customers — generations are not far behind. More than one-quarter whether challenger or established banks — can (26 percent) of all respondents said they would switch use our tool to not only fight fraud, but also banks for 24/7 access to chatbot banking services. lower false positives, doing so with seamless authentication without manual intervention. This Now, as consumers turn to chatbots and other emerging keeps their customers safe while assuring their financial tools and technologies, companies around the experiences in [the] digital banking era are better space are racing to debut new digital offerings. than ever.” Around The Digital Banking World Westpac, for instance, is investing in biometric-based banking channels. The bank, one of Australia’s Big Four Saurabh Bajaj, FIs, recently announced it would allow consumers to link senior vice president of product at Feedzai bank accounts to their iPhones or other Apple devices and use them to make payments to payees at any bank. © 2018 PYMNTS.com All Rights Reserved 3 What’s Inside ability to manage their financial accounts and complete transactions within WhatsApp's platform. This follows a similar partnership in Nigeria. In Dubai, Emirates NBD is also integrating its business banking with WhatsApp, following a successful pilot test among the bank’s employees. This full-scale integration is expected to be available to all customers soon, and will meet growing demand for digital and social media- hosted banking interactions, according to a press release. To read more on these stories and find headlines from around the digital banking world, check out the Tracker’s News and Trends section (p. 10). The new feature, Siri for Westpac, can also be used to perform other digital banking tasks, such as viewing As fraudsters get smarter, banks turn to data account balances, transferring money or paying bills. Banks around the world are offering new mobile, The move aims to meet growing customer demand for digital and connected channels to their customers, but smart assistant-fueled features: 67 percent of surveyed those efforts are also providing fraudsters with new Westpac customers said that they would be “likely” to opportunities to target FIs. use a voice assistant to check their bank accounts. Bill Nelson, CEO of the Financial Services Information Back in the United States, Square wants to bring more Sharing and Analysis Center, believes that data and banking-related capabilities to its Cash App. In a speech collaboration can help banks combat cybercrime. In at the recent Code Conference in New York City, Sarah the latest Digital Banking Tracker™ feature story (p. 6), Friar, the company’s former chief financial officer, said Nelson discusses the recent increase in fraud targeting the company is currently considering adding features FIs and how banks can, and should, work together to such as savings products and stock-trading options. stop it. During the annual event hosted by Recode, Friar said consumers should soon “look to the Cash App” for October Digital Banking Tracker™ updates “anything you do today with a bank account.” This edition of the Tracker features profiles of more than 230 players in our ever-expanding provider directory, Financial institutions (FIs) in Africa and the Middle including three new additions: Qonto, Memento East are integrating banking with social media. Africa's Payments and WLTH. Access Bank recently announced a partnership with WhatsApp, which will give customers in Zambia the © 2018 PYMNTS.com All Rights Reserved 4 What’s Inside 5Five Fast Facts 76% 52% 43% Share of Nigerian Share of American Share of consumers consumers who consumers age who prefer to use prefer mobile 65 and older who chatbots to address banking apps do most of their any banking issues 65% banking online 46% Portion of Nigerian Portion of American consumers who use consumers aged a mix of physical 18 to 29 who use and digital banking mobile banking channels more often compared to other channels © 2018 PYMNTS.com All Rights Reserved 5 HOW FIS ARE COMBATTING INCREASINGLY SOPHISTICATED ATTACKS © 2018 PYMNTS.com All Rights Reserved 6 What’s Inside Feature Story So I think [banks] need to be vigilant. I think organizations need to invest in new technologies and [make] sure they’re catching any critical systems vulnerabilities. … They have to know what [and who] the biggest threats are. BILL NELSON, CEO OF FS-ISAC ecent reports from The Wall Street Journal regarding Banks seem to be following that advice and have a sizable increase in the number of cyberattacks ramped up fraud prevention efforts in recent years. The Ron big banks may have been greatly exaggerated. technologies implemented for this purpose have a wide Some industry experts believe that financial services range of applications and uses, and they each share and companies have not seen a rise in cyberthreats at all. rely on data. Bill Nelson, CEO of the Financial Services Information Using data to fight fraud Sharing and Analysis Center (FS-ISAC), told PYMNTS One of the biggest challenges for banks is the sheer that these rumors are likely the result of an overzealous amount of attack methods. FS-ISAC officials have watchdog, or security vendors that are hoping to create seen fraudsters use a wide, and expanding, range a market for their offerings. That said FIs aren’t out of the woods yet. There hasn’t been a surge in the amount of fraud specifically targeting financial services firms, but the overall fraud rate is climbing, particularly as consumers embrace mobile and digital banking channels. “We saw that report, and it was news to us … but attacks are always increasing,” he said. “So I think [banks] need to be vigilant. I think organizations need to invest in new technologies and [make] sure they’re catching any critical systems vulnerabilities. … They have to know what [and who] the biggest threats are.” © 2018 PYMNTS.com All Rights Reserved 7 Feature Story UNDER THE HOOD Cybercriminals remain a threat, particularly those who steal money, Bill Nelson, CEO OF FS-ISAC because they go after banks and their customers — companies like retailers. How can banks and FIs prevent themselves from becoming victims of phishing attacks? of techniques. These attacks are not just growing in number, though — they’re becoming more adept at wreaking havoc.