Navigating Digital Transformation Challenges in Financial Security

By Brian Hosie, VP of Engineering, Lendio

Brian Hosie, VP of Engineering, Lendio

Digital transformation is more important for banking than any other industry sector, according to Gartner’s 2018 CIO Agenda Survey. In today’s connected world, customers expect to be able to manage their money as fast as their network speed allows them. This means they expect greater flexibility and improved customer experience. It also means the institutions that serve them must embrace digital transformation and emerging technology to enhance these functions.

One of the biggest changes in financial services over the past decade is the emergence of online marketplaces for consumer loans and business loans. One of these marketplaces, Lendio, has facilitated over 40,000 small business loans since its 2011 inception. Like 93 percent of financial services firms, Lendio’s main objective in digital transformation is to improve the customer experience and increase engagement. In doing so, there are distinct challenges to navigate to ensure neither innovation nor security are compromised.

1. Operational challenges: The best fintech companies increasingly push to automate financial transactions and simplify processes for both the customer and the business. But these improvements can also expose sensitive data and personally identifiable information to threats from phishing attacks and other cyber criminals.

"Ever-changing security threats, fear of data breaches, and regulatory compliance will continue to drive security investments across all industries," says Eileen Smith, program director at IDC. In fact, the new IDC spending guide forecasts nearly $120 billion in worldwide spending on security products and services in 2021. For companies like Lendio, this spending translates into employing industry-standard encryption and security standards to protect their customers’ sensitive data.

“The golden rule is to treat your customers’ data like you would want your own personal data to be treated and handled”

2. Compliance challenges: General Data Protection Regulation (GDPR) is the most prominent example of how important it is for businesses to be agile in order to respond quickly and effectively to new regulation. Additionally, companies like Lendio must allocate enough resources to compliance with the ever-changing regulations in the finance industry, including those from FinCEN.

Flexible and scalable systems are critical to keeping up with the demands of rapid digital transformation and technological advances, as well as regulatory and compliance changes as they develop. But this can be tough to do in smaller businesses where resources run lean. It’s important for financial services companies to know what their core competency is and go all in on it by building best-in-class systems and processes. They should purchase or rent solutions that are not in their wheelhouse.

3. Workforce challenges: How do businesses stay up-to-date with the demands of digital transformation? They need a competent and skilled workforce, yet finding talent to fill technology positions is a huge challenge for many. Lendio is located in the heart of Silicon Slopes in Utah, a hotbed for startups and tech giants. Still, there isn’t enough qualified talent to fill all of the open positions in the area, and it’s easy to find your business in a bidding war when the right candidate comes along.

How can companies across all sectors navigate similar challenges in the most effective way? By not forgetting one critical factor: trust.

The golden rule is to treat your customers’ data like you would want your own personal data to be treated and handled. Convenience for customers shouldn’t come at the expense of their confidential data. Customers and partners are increasingly concerned with the protection of their data, and fintech companies like Lendio must not only earn their trust, but also maintain it.

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