# Balancing innovation and security within the financial services industry
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-09-08
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Balancing Innovation and Security in Fintech Digital
Meta Description: Discover how fintech companies are navigating the challenges of digital transformation in the financial services industry to ensure innovation is securely
URL: https://financedigest.com/balancing-innovation-and-security-within-the-financial-services-industryhtml

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_By **Altaz Valani**, Director of Insights Research at_ [_Security Compass_](https://www.securitycompass.com/)

The financial services industry is forecasted to be worth [$300bn by 2022](https://www.toptal.com/finance/market-research-analysts/fintech-landscape), but despite this fintech companies are still facing important decisions when it comes to their digital transformation plans.

Between ever increasing customer expectations and the requirement to comply with changes in the regulatory landscape, fintechs are under increasing pressure to ensure innovation is properly and securely implemented.

The risk for a financial services firm of a large-scale data breach or software vulnerability being exposed could see operations paused and substantial penalty fines issued by regulators in the event of a serious security breach. However, the impact of such a scenario goes beyond the financial, with damage to brand reputation also a significant factor.

From biometric authentication and Robotic Process Automation (RPA) to Artificial Intelligence (AI), the ever-increasing adoption of new technology within the [financial services](https://www.financedigest.com/trends-in-the-financial-service-landscape-and-the-impact-on-fraud.html "Trends in the financial service landscape and the impact on fraud") industry is only deepening the volume of customer data at potential risk.

**[Threats from the inside](https://www.financedigest.com/why-insider-threat-presents-a-big-risk-to-financial-services-organisations.html "Why insider threat presents a big risk to financial services organisations") and outside**

Managing this [risk carries both internal and external challenges](https://www.financedigest.com/retreating-up-the-risk-curve-is-no-solution-to-the-growth-challenge.html "Retreating up the risk curve is no solution to the growth challenge") for fintechs. Internally, the main [areas of concern are typically focused around ensuring there is the required cyber skills](https://www.financedigest.com/what-skills-and-areas-of-knowledge-should-finance-teams-develop-during-2023.html "What Skills and Areas of Knowledge Should Finance Teams Develop During 2023? "), knowledge and expertise within the team; while externally, keeping up to speed with regulation is just as demanding.

This means that balancing a desire for [innovation and growth with robust security](https://www.financedigest.com/why-the-finance-sector-must-prioritise-mobile-security-over-innovation.html "Why the finance sector must prioritise mobile security over innovation") and risk management processes is absolutely vital for fintechs. Just as the nature and variety of [cyber threats](https://www.financedigest.com/5-ways-to-protect-your-company-from-cyber-security-threats.html "5 Ways to Protect Your Company From Cyber Security Threats") continues to grow and vary, every new digital service and product carries an ever-evolving range of security risks.

**[Managing the cloud](https://www.financedigest.com/workforce-management-the-next-cloud-resource-for-businesses.html "Workforce management; the next cloud resource for businesses?")**

Due to the perceived value of the information held, the financial services [industry has traditionally always been one of the main sectors for targeted data](https://www.financedigest.com/navigating-consumer-data-in-the-finance-industry.html "NAVIGATING CONSUMER DATA IN THE FINANCE INDUSTRY") breaches. Consequently, many [financial services](https://www.financedigest.com/as-hackers-declare-cyberwarfare-financial-services-cannot-afford-to-be-complacent.html "As hackers declare cyberwarfare, financial services cannot afford to be complacent") organisations have focused their IT infrastructure on the cloud as a solution.

However, cloud migration actually increases the attack surface of applications, which is why the [need to meet security](https://www.financedigest.com/why-preparation-for-new-swift-cyber-security-standards-needs-to-start-now.html "‘Why preparation for new SWIFT cyber security standards needs to start now’") and compliance requirements cannot be overlooked when deploying new apps directly in the cloud or developing automation-as-a-service or analytics-as-a-service capabilities.

Aligning [security and digital delivery strategically is therefore one of the most complex challenges facing financial](https://www.financedigest.com/post-brexit-uk-workers-can-have-financial-security.html "Post Brexit – UK workers CAN have financial security") service businesses. As a result, many are turning their attention to [Balanced Development Automation](https://www.financedigest.com/adopting-ai-balancing-automation-with-risk-management.html "Adopting AI: balancing automation with risk management") (BDA) as a solution.

**Aligning security with DevOps – BDA**

In order to try and ensure a competitive edge in the long term, [fintechs must](https://www.financedigest.com/fintechs-must-remove-security-and-compliance-friction-to-unlock-new-growth.html "Fintechs Must Remove Security and Compliance Friction to Unlock New Growth") create synergies between their business, security, and DevOps teams. This is where BDA can play a vital role because it aligns DevOps with security, ensuring the latter is ‘baked’ into the [software development](https://www.financedigest.com/reckon-software-goes-from-strength-to-strength-with-appointment-of-new-partner-development-manager.html "Reckon Software goes from strength to strength with appointment of new Partner Development Manager") process.

BDA acts as a guide through every step of the software development process, ensuring security checks are built in from the beginning, ultimately enabling DevOps teams to [deliver secure](https://www.financedigest.com/taming-the-new-wild-west-how-biometrics-can-help-the-ecb-deliver-a-secure-digital-euro.html "Taming the ‘new wild west’: how biometrics can help the ECB deliver a secure digital euro") products. This is essentially a three-step process:

1) Security should [equip the development team](https://www.financedigest.com/how-finance-leaders-can-equip-their-team-to-tackle-change.html "How Finance Leaders Can Equip Their Team to Tackle Change") with awareness of what is required from a security controls perspective, and likewise for risk and compliance. Developers [need to know](https://www.financedigest.com/4-things-you-need-to-know-about-mortgages.html "4 Things you Need to Know About Mortgages") from the inception what these parameters are and factor them into their work from the start.

2) The second stage is examination of [security metrics based on existing controls and emerging risks](https://www.financedigest.com/combating-the-security-risk-of-remote-working.html "Combating the security risk of remote working "). The end result of this might be creating new controls, but they have to be developed with an understanding of impact based on [cost and business](https://www.financedigest.com/green-initiatives-cut-self-storage-business-space-stations-energy-costs-by-75.html "Green initiatives cut self-storage business Space Station’s energy costs by 75%") exposure. It is [ultimately a business](https://www.financedigest.com/the-ultimate-excel-sales-tracking-templates-for-businesses.html "The Ultimate Excel Sales Tracking Templates For Businesses") decision to determine the right risk threshold.

3) The third and last stage of the BDA process sits with [governance at an audit and board level](https://www.financedigest.com/2016-must-be-the-year-of-board-level-transparency-and-good-governance.html "2016 must be the year of board level transparency and good governance"). [Metrics collected from the first two stages are rolled into this and KPIs measured at this level are based on core business](https://www.financedigest.com/5-fx-metrics-your-business-should-be-tracking.html "5 FX METRICS YOUR BUSINESS SHOULD BE TRACKING") concerns around areas including compliance, resilience, reputation and cost.

These three stages equip [fintechs with a BDA programme that is aligned with business](https://www.financedigest.com/business-finance-the-fintech-evolution.html "Business finance: the fintech evolution") objectives while constructing appropriate guardrails that govern the execution and delivery of the software. With this alignment, DevOps and security teams can execute development in a [balanced way while managing risk](https://www.financedigest.com/managing-corporate-currency-risk-the-cfos-balancing-act.html "Managing Corporate Currency Risk: The CFO’s Balancing Act").

**Matching [innovation with security](https://www.financedigest.com/infosecurity-europe-agenda-spotlights-innovation-as-security-leaders-address-cybersecurity-spend-in-the-face-of-economic-headwinds.html "Infosecurity Europe agenda spotlights innovation as security leaders address cybersecurity spend in the face of economic headwinds")**

The success or failure of fintechs today can often depend on how they are able to balance the [adoption of new technologies](https://www.financedigest.com/the-benefits-of-adopting-cloud-technology-in-the-finance-industry.html "The benefits of adopting cloud technology in the finance industry") with maintaining the privacy of their customers and the security of their customers’ data.

This is a delicate balance that requires action from outset to [identify and address risks](https://www.financedigest.com/legal-entity-identifiers-leis-how-can-banks-minimise-risks.html "Legal Entity Identifiers (LEIs): how can banks minimise risks?"). By building security into applications from the very beginning of the software development lifecycle, [financial services companies will be able to align security](https://www.financedigest.com/what-can-we-learn-from-financial-services-security.html "What can we Learn from Financial Services Security?"), compliance and risk priorities with the overall business goals.


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