IBS Journal December 2016
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Hummingbird for mobile, Cryptowall for ransomware and Dorkbot for banking. Hummingbird, though only having a 3.6% market share of the malware world, is responsible for up to 72% of all mobile attacks so far this year. Cryptowall is a larger player, having around 44% share of the ransomware sector, more than the next two – Cerber and Locky – combined. Dorkbot, which uses IRC to infiltrate its victims, held a 31% share of banking malware, beating off Zeus and Tinba.
Security issues are becoming a multi-faceted problem for banks as well as vendors. It’s no longer a case of buying the most expensive software and leaving it to “do its thing”. Mobile technology, along with new technologies like biometrics and voice-activation, add convenience for the customer but also new attack vectors for the hackers. Unless FIs become better at tackling these problems, we can expect a new spate of embarrassments in 2017.
Core banking: at the heart of things
Core banking has a way of grinding on inexorably in the background of the financial services industry. 2016 has been no exception, with a number of wins being made by major vendors and a few new geographic locations being explored by traditionally static firms.
The IBS Journal Sales League Table crowned Temenos top of the pile for core banking and the firm looked to continue its success with a hatful of wins this year. These included Soneri Bank, Bank of Ireland and Qatar Islamic Bank. Misys completed deals with Banco CTT, Habib Bank and Trade Bank of Iraq. The vendor plotted the second-largest IPO of its kind in the UK, worth an estimated £4.5 billion. It was hailed as a “Brexit success story” – going ahead with its flotation despite the turbulent nature of the market following the UK’s vote to leave the EU. Plaudits and congratulations were short-lived, though, as it cancelled its plans over “market conditions”.
There are new players in the industry every year. 2016 saw the launch of a number of challenger banks, so why not have a challenger core banking vendor? Former Barclays head honcho Anthony Jenkins’
new business, 10x Future Technologies, launched and announced its first customer in the same week. It will be working with Virgin Money, implementing its cloud-based core banking system which hasn’t even got a name yet. Thought Machine, a London-based core banking startup, is being led by former Google engineer Paul Taylor to a future in which replacing a core banking system is as easy as installing a new program on your computer. Another solution based in the cloud, could we perhaps finally be seeing clear skies for outsourced systems?
A survey undertaken this year found that despite 70% of C-level respondents at banks being “frustrated” with their legacy systems, less than 4% said they were likely to replace it. Of the banks surveyed, 78% of them spend the majority of their IT budget on simply maintaining their current system – the cost of which keeps rising and rising. Switching a core system is not an easily done thing, and despite 2016 being an unremarkable year in terms of deals, perhaps we will see more exceptional signings being made in 2017, when banks have further complex systems to integrate?
Uber/banking backlash
Bad news for lazy conference speakers. It has been the done thing over the last couple of years to talk up an impending Uber moment for banks. But finally this has been exposed as a non-starter. Uber has disrupted the minicab trade and, here in the UK, London’s black taxis, not massive corporations. It also has cash to burn, whereas its much smaller rivals don’t. It’s one thing to disrupt a ‘mom- and-pop’ business, it’s quite another to take on a big FI with a huge customer base and stacks of money. Not that the banking establishment can afford to be complacent. There’s an undeniable threat coming from FinTechs, but it is not a question of whether some cool upstart is going to put a 100-plus year old organisation out of business, rather how the banking landscape is evolving to accommodate a much greater diversity of players, each of whom is looking to transform a small piece of the overall jigsaw.
As Anna Bennett, Head of Partners, Monitise FINkit, put it in a rather good LinkedIn post: “Please, let’s find another example which more closely befits our market and doesn’t dumb it all down. It’s a richly-layered and complex market where things are rarely as black and white as Uber.”
www.ibsintelligence.com
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