Fintech

Technology push could open Hong Kong banks to more cyberattacks in 2019, KPMG says

  • New report comes days after HSBC was forced to increase security on its PayMe e-wallet app
  • Financial institutions need to rethink their approach to cybersecurity in the coming year, report says
PUBLISHED : Tuesday, 11 December, 2018, 10:17am
UPDATED : Tuesday, 11 December, 2018, 9:40pm

The advent of virtual banking and the increased use of emerging technology could open Hong Kong’s banks to more risks of cyberattacks in the coming year, according to KPMG.

In a new report, the accounting and consulting firm said that it expects to see more cyberattacks and breach attempts in 2019 as traditional banks increasingly adopt new technology to remain competitive with new financial providers and as hackers and online criminals become more sophisticated.

The report came just days after HSBC was forced to tighten security around its PayMe e-wallet app after 20 accounts were illegally accessed using an email scam.

HSBC tightens PayMe app security after accounts illegally accessed

“Both banks and consumers need to be mindful that we currently may not fully understand all cyber threat scenarios impacting these emerging technologies,” Henry Shek, head of IT advisory risk consulting at KPMG China, said.

“At the same time, cyber criminals are already using new and advanced methods to manipulate security weaknesses,” he said. “This means that the traditional security and protection mechanisms that banks have in place may not be sufficient to deal with [artificial intelligence] and advanced technology-enabled attacks.”

KPMG said that it expects Hong Kong’s banks to rethink their approach to cybersecurity in the coming year.

“This includes investing in cybersecurity as part of the bank’s innovation budget, creating a holistic and agile process to become more resilient to the evolving nature of the cyber threat landscape, and ensuring that cybersecurity and resilience become part of every digital adoption,” Shek said.

The report – Hong Kong Banking Outlook 2019 – said that banks will need to use data and technology to improve the experience for their customers if they want to be successful in the future.

“This is accentuated by the emergence of virtual banks in Hong Kong, which will disrupt traditional business models and how customer experience is delivered in the city,” Paul McSheaffrey, head of banking, Hong Kong, at KPMG, said.

The Hong Kong Monetary Authority is expected to issue its first virtual banking licences by the end of this year after 29 applications were made this summer, including requests by the online lender WeLab, the telecommunications company HKT and Standard Chartered Bank.

Hong Kong’s appeal as a virtual banking hub is about to be put to the test

Isabel Zisselsberger, head of financial management and customer and operations, Hong Kong, at KPMG China, said that the banking sector in Hong Kong continues to be perceived as lagging behind other sectors in terms of adapting to the needs of its customer base.

“Understanding the changing expectations of customers’ needs and preferences, and what a customer values will be a critical enabler in helping banks determine where best to invest their transformation efforts,” Zisselsberger said.

“While all banks have undergone some degree of digital transformation, we believe that not all have put the customer at the core of their digital strategy,” she said. “Traditional banks tend to follow the opposite approach by seeking to improve processes or product offerings first before examining customer touchpoints. We expect this mindset to change in 2019.”

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