By Rich Itri, ECI
The financial services industry is no stranger to digital transformation (DX). However, it’s also one of the most targeted industries for cyberattacks and is facing increasingly stringent SEC regulations and a talent shortage.
In other words, even though they’re investing in innovation, financial firms – particularly those in the alternative investment industry – end up spending most of their time trying to keep up with today’s demands instead of focusing on optimizing their infrastructure for the future.
Cyberattacks or new regulations will always be in play, so how can financial organizations get their DX efforts back on track?
To shift from a reactive to a proactive stance, third-party support is essential. In fact, a new IDC study shows that many firms are turning to MSPs to not only help “keep the lights on” but to play a pivotal role in supporting their modernization efforts and navigating new challenges and demands.
If your company services organizations in this sector, you have a huge opportunity to step into more of a strategic partnership with these institutions. Let’s look at critical areas where they will need your expertise.
Coupling Digital Transformation With Cybersecurity
As the industry tackles a rapidly changing threat landscape, increased regulation, and a continuous need to innovate, IDC’s study on the state of DX and cybersecurity in the alternative investment market found that:
- 89% of institutions are increasing their DX budget in 2022 over 2021.
- As they digitally transform, over half identified security and privacy as their top concern.
- 61% have undertaken security-focused transformation projects.
What these findings show is that the alternative investment market recognizes the value of coupling DX and cybersecurity strategies – and they are prepared to invest in these efforts. However, most firms struggle with execution and management:
- 67% of respondents listed staff augmentation as a core reason to leverage consulting services.
- Nearly 30% of institutions plan to heavily outsource to MSPs in the next two years, more than doubling the current usage (12%).
- 80% of institutions in North America and 81% in Europe indicated that cybersecurity consulting services are critical to digital transformation efforts.
To best support these strategies, ask your clients about their DX and security challenges and make sure you are operationally ready to support them as they increasingly look to outside expertise for time-intensive processes and secure emerging technologies.
Selecting The Right Tools And Processes
You're more than just a technology provider; you're also a consultant! In that role, you should advise your customers on cybersecurity tools and processes that can help them keep pace with mounting regulations – and keep their DX initiatives on track.
For example, threat monitoring, alerting, and response is a time-consuming activity requiring specifically skilled and trained personnel. However, given the industrywide skills gap and complexities of achieving compliance with the proposed SEC rules, institutions are exploring vendor-managed security solutions as a more cost-effective approach that allows them to focus in-house resources on routine business and DX efforts.
IDC found that the cybersecurity attributes outsourced most often include security operations center (SOC) presence and management (51%) and advanced threat detection technology (50%).
Because firms also recognize the value of embedded security – where cybersecurity planning is incorporated into their DX processes – and are actively investing in these projects.
Considering these findings, it makes sense for your company to step in and provide struggling financial services organizations with the expertise they need to fill in the gaps and ensure they have flexibility and scale to achieve their modernization objectives – securely and in accordance with SEC rules.
Consider the following:
- Embed security processes into everything you do. Not only do your clients require it but, not doing so can be costly in the long run. When security is treated as an afterthought and tools are added after the modernization projects are completed, your clients run the risk of unplanned expenses and risk exposure.
- To enable advanced threat protection and free-up resources, guide your clients toward a fully-managed Security Information and Event Management (SIEM) solution backed by a SOC that can both monitor for and act quickly on suspicious activity – on-premises and in the cloud.
- Keep cyber hygiene in mind. This is especially important as your clients adapt to the incoming SEC requirements. Work with them to take inventory of their digital assets and how they are managed and secured. Determine if they have written policies and procedures for responding to vulnerabilities and incidents. Offer best practices for maintaining cybersecurity records and complying with the SEC’s 48-hour reporting rule.
Could This Be An Opportunity For Your MSP?
Financial services firms are taking full advantage of digital transformation and security is only increasing in significance to the success of these projects. But they can’t do it alone. Outsourcing is a leading trend in the financial services industry. The question is, is your organization ready to help these companies scale their DX initiatives and build and maintain a strong security posture in the process?
About The Author
Rich Itri is Chief Innovation Officer at ECI