Cybersecurity and Innovation: The Twin Pillars of Modern Banking
February 20, 2025, 10:50 pm
In the ever-evolving landscape of banking, two forces stand tall: cybersecurity and innovation. A recent survey by EY and the Institute of International Finance (IIF) reveals that cybersecurity remains the foremost concern for banks worldwide. For the third consecutive year, it tops the risk management list. This is not just a statistic; it’s a clarion call for banking leaders.
The survey, which gathered insights from 115 banks across 45 countries, paints a vivid picture of the challenges faced by Chief Risk Officers (CROs). Seventy-five percent of these leaders identify cybersecurity as the chief risk for the next year. This concern is not fleeting; 87% believe it will remain a priority for the next three years. Cybersecurity is the fortress protecting the castle of finance.
But the landscape is shifting. Operational resilience and geopolitical risks are climbing the ranks. Thirty-eight percent of CROs now see operational resilience as a top concern, while geopolitical risk has surged from 16% last year to 38% this year. The world is a chessboard, and every move counts. Banks must adapt to the unpredictable nature of global politics.
The survey highlights a growing urgency among banking leaders. They are not just reacting; they are strategizing. Fifty-seven percent of CROs plan to prioritize political assessments. The super-election cycle of 2024 has left its mark, and the ramifications are profound. Seventy percent of CROs anticipate that changes in geopolitical conditions will impact their organizations. The winds of change are blowing, and banks must adjust their sails.
Yet, amid these challenges, innovation beckons. Artificial intelligence (AI) is emerging as a key player in the banking sector. Nearly half of the respondents view AI as a critical initiative for the next three years. It’s not just about keeping pace; it’s about leading the charge. Banks are transforming risk management practices through data analysis and automation. However, the road is fraught with obstacles. Budget constraints hinder the operationalization of AI, with 41% of CROs citing limited budgets as a top barrier.
The challenge is not just financial. The scale of change required is daunting. Sixty percent of CROs see the deployment of AI as a significant challenge. Talent is the lifeblood of this transformation. Yet, attracting and retaining skilled professionals in cybersecurity and AI is a struggle. More than half of CROs report that this is their biggest challenge. The race for talent is fierce, and the stakes are high.
As banks navigate this complex landscape, they must also contend with regulatory uncertainty. The aftermath of the 2024 election super-cycle has left a fragmented regulatory environment. Almost two-thirds of CROs in North America cite changes in the regulatory agenda as a top concern. The regulatory landscape is a maze, and banks must find their way through it.
The interconnectedness of risks is becoming increasingly apparent. CROs are evolving into “watchtowers,” overseeing a myriad of intersecting risks. This evolution is not just a trend; it’s a necessity. The role of the CRO is expanding, and with it, the responsibility to cultivate the next generation of risk leaders. This is not just about survival; it’s about thriving in a tumultuous environment.
The banking sector is at a crossroads. Cybersecurity and innovation are not just buzzwords; they are the twin pillars supporting the future of finance. Banks must invest in both technology and talent. It’s not an either-or scenario; it’s a delicate balance. The opportunity for growth is immense, but so is the risk of stagnation.
As the world becomes more interconnected, the risks multiply. The importance of operational resilience cannot be overstated. Banks must be prepared for the unexpected. The recent survey underscores this reality. The challenges are daunting, but they also present opportunities for those willing to adapt.
In Switzerland, the startup ecosystem is also feeling the impact of these trends. The EY Startup Barometer reveals a burgeoning interest in AI among Swiss startups. In 2023, 10% of funding rounds were secured by AI-driven startups. This figure more than doubled in 2024, reaching 22%. The growth of AI in the startup landscape mirrors the banking sector’s focus on innovation.
Female founders are making strides, albeit slowly. The share of funded startups with exclusively female founding teams rose from 2% in 2023 to 7% in 2024. However, mixed founding teams saw a decline. The gender gap in tech remains a challenge, but the potential for change is palpable.
The DACH region presents a mixed picture. Switzerland, despite a 15% decline in invested capital, holds its ground. Austria faces a steeper decline, while Germany’s startup ecosystem shows signs of recovery. The health sector in Switzerland attracts significant investment, highlighting a strategic focus on innovation in healthcare.
In conclusion, the banking sector stands at a pivotal moment. Cybersecurity and innovation are not just challenges; they are opportunities for growth and transformation. As banks navigate the complexities of the modern world, they must embrace change, invest in talent, and prioritize resilience. The future of banking is not just about surviving; it’s about thriving in a landscape defined by uncertainty and opportunity. The chess game continues, and the next move could define the future.
The survey, which gathered insights from 115 banks across 45 countries, paints a vivid picture of the challenges faced by Chief Risk Officers (CROs). Seventy-five percent of these leaders identify cybersecurity as the chief risk for the next year. This concern is not fleeting; 87% believe it will remain a priority for the next three years. Cybersecurity is the fortress protecting the castle of finance.
But the landscape is shifting. Operational resilience and geopolitical risks are climbing the ranks. Thirty-eight percent of CROs now see operational resilience as a top concern, while geopolitical risk has surged from 16% last year to 38% this year. The world is a chessboard, and every move counts. Banks must adapt to the unpredictable nature of global politics.
The survey highlights a growing urgency among banking leaders. They are not just reacting; they are strategizing. Fifty-seven percent of CROs plan to prioritize political assessments. The super-election cycle of 2024 has left its mark, and the ramifications are profound. Seventy percent of CROs anticipate that changes in geopolitical conditions will impact their organizations. The winds of change are blowing, and banks must adjust their sails.
Yet, amid these challenges, innovation beckons. Artificial intelligence (AI) is emerging as a key player in the banking sector. Nearly half of the respondents view AI as a critical initiative for the next three years. It’s not just about keeping pace; it’s about leading the charge. Banks are transforming risk management practices through data analysis and automation. However, the road is fraught with obstacles. Budget constraints hinder the operationalization of AI, with 41% of CROs citing limited budgets as a top barrier.
The challenge is not just financial. The scale of change required is daunting. Sixty percent of CROs see the deployment of AI as a significant challenge. Talent is the lifeblood of this transformation. Yet, attracting and retaining skilled professionals in cybersecurity and AI is a struggle. More than half of CROs report that this is their biggest challenge. The race for talent is fierce, and the stakes are high.
As banks navigate this complex landscape, they must also contend with regulatory uncertainty. The aftermath of the 2024 election super-cycle has left a fragmented regulatory environment. Almost two-thirds of CROs in North America cite changes in the regulatory agenda as a top concern. The regulatory landscape is a maze, and banks must find their way through it.
The interconnectedness of risks is becoming increasingly apparent. CROs are evolving into “watchtowers,” overseeing a myriad of intersecting risks. This evolution is not just a trend; it’s a necessity. The role of the CRO is expanding, and with it, the responsibility to cultivate the next generation of risk leaders. This is not just about survival; it’s about thriving in a tumultuous environment.
The banking sector is at a crossroads. Cybersecurity and innovation are not just buzzwords; they are the twin pillars supporting the future of finance. Banks must invest in both technology and talent. It’s not an either-or scenario; it’s a delicate balance. The opportunity for growth is immense, but so is the risk of stagnation.
As the world becomes more interconnected, the risks multiply. The importance of operational resilience cannot be overstated. Banks must be prepared for the unexpected. The recent survey underscores this reality. The challenges are daunting, but they also present opportunities for those willing to adapt.
In Switzerland, the startup ecosystem is also feeling the impact of these trends. The EY Startup Barometer reveals a burgeoning interest in AI among Swiss startups. In 2023, 10% of funding rounds were secured by AI-driven startups. This figure more than doubled in 2024, reaching 22%. The growth of AI in the startup landscape mirrors the banking sector’s focus on innovation.
Female founders are making strides, albeit slowly. The share of funded startups with exclusively female founding teams rose from 2% in 2023 to 7% in 2024. However, mixed founding teams saw a decline. The gender gap in tech remains a challenge, but the potential for change is palpable.
The DACH region presents a mixed picture. Switzerland, despite a 15% decline in invested capital, holds its ground. Austria faces a steeper decline, while Germany’s startup ecosystem shows signs of recovery. The health sector in Switzerland attracts significant investment, highlighting a strategic focus on innovation in healthcare.
In conclusion, the banking sector stands at a pivotal moment. Cybersecurity and innovation are not just challenges; they are opportunities for growth and transformation. As banks navigate the complexities of the modern world, they must embrace change, invest in talent, and prioritize resilience. The future of banking is not just about surviving; it’s about thriving in a landscape defined by uncertainty and opportunity. The chess game continues, and the next move could define the future.