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2014 Predictions for the Banking and Financial Services Industry

Overall, we can look back on 2013 and feel very good about the results for the industry as a whole. Earlier in the year I recall a survey stating that over 40% of bankers expected another financial crisis in the near future. Thankfully that didn't happen. Other good news for 2013: no European country defaulted; the Euro held together; home prices in the U.S. are up; the S&P 500 went up an incredible 30%; the U.S job market the best since 2008; and last but not least, my youngest son is graduating from college and the job market for new grads is the best it has been in years!
2013 also brought us to a new and disturbing chapter in the world of Internet security. Banks were hit with the most severe and widespread DDoS attacks in the history of the Internet, with up to 20 banks being attacked in some weeks, and nearly 10 banks brought offline on some days. Within the final days of 2013, the news shifted to data breach, with a massive credit card breach in retail sector. And of course, 2013 marked the year of Snowden revelations. Summing up these event calls into question the fundamental trust that people have in the Internet and the Web.

So what can we expect in 2014? Predictions are always fun. Here goes:

Prediction #1: All Quiet on the Banking DDoS Front

Someone has to venture a prediction on this topic, so let it be me. In 2014, I do not expect that we will see anywhere near the level of DDoS attacks against the banking sector as we did in 2013. We will see only a handful of isolated DDoS attacks against banks in the U.S., and most of those will go unnoticed due to improved DDoS defenses now in place.

My reasoning? We can conclude that the means of launching a DDoS attack, the tools and methods, are certainly in place. Brobot is still out there, and the means of launching large scale attacks are in place.

Motive, however, is questionable. Sure, in 2013 attackers showed everyone how they could take down banking sites, and we were shocked at the first few banks that went down. But banks responded, and depositors didn't flee their banks. The shock value is no longer there. Data breach is where the action is now, and the motivations are now higher there. Geo-politically, there is less motivation now as well. The U.S has reached an historic agreement with Iran. And with the stock market up 30% for the year, many people are loving their banks once again.

The opportunity to launch a successful DDoS attack against a U.S. Bank is also now far less than in 2013. Many banks have successfully raised their DDoS defenses, created successful information sharing programs such as FS-ISAC, and have joined forces in an "attack against one of us is an attack against all of us" attitude.

Prediction #2: DDoS Focus Shifts to the Regulators

We have already experienced the response of the regulators to the massive DDoS attacks against the banking industry. Questions have been added to handbooks, letters have been sent to banks, and the regulators have now begun to ask specific questions on how banks are prepared for DDoS attacks. As I have said for the past few months, "It doesn't matter if whether there are more attacks against the banks - the regulators are coming." And it's not just banks, and it not just your regulator. All regulated segments of the financial industry will be examined, from banking and credit unions, and to segments that were not even attacked in 2013, such as the insurance sector. There will be a pile on effect to these new regulations, starting the recently released NIST framework, with DDoS and cyber security regulations making their way into agencies and industry regulators of all types. Even more challenging, your business partners will come after you in 2014, with their questions about your DDoS and cyber security controls. They will not only ask about your controls, but demand that you question your supplier as well. These questions will cascade down throughout the industry, resulting in unbudgeted work and expenses, while keeping your consultants delighted.

Prediction #3: Bitcoin Becomes Real

My definition of real is this: A publicly traded, Fortune 500 company accepting Bitcoin in a business to business financial transaction for payment of goods or services.

Although it's fun to hear about a sandwich shop somewhere in the U.S., or a small eCommerce merchant accepting Bitcoin, to me that is not enough. With the Department of Justice telling the U.S. Senate that Bitcoins can be a "legal means of exchange", it's just a matter of time before Bitcoin become real in business world. I think 2014 will be the year we see Bitcoin become real.

Prediction #4: Back to Business for Banks

Over the past few years banks and FIs have overcome major challenges, including the financial crisis, the mortgage mess, massive layoffs, zero interest rates, the transition to mobile banking, and massive DDoS attacks, to name just a few. Are they now ready to get back to business? I think so.

Point one: The stock market went up 30% last year, the most since 1997. This will drive investors to move money, seek new advisors, trade stocks - much of which occurs on the Internet.

Point two: The transition to mobile is behind us. Nearly every bank now has an "app", and many banks have reported receiving more transactions on mobile than on other channels. And those apps better be fast and reliable.

Point three: Interest rates are on the rise. Consumers need only a small delta in savings rates to move their money from one bank to another. The need for simple and fast, web-based and mobile-based account opening processes is greater than ever.

Much of 2014 will be about keeping current customers and winning new customers by paying attention to the basics: loyalty, convenience, user experience, and trust, to name a few. At Akamai, we will do our part by continuing to help banks and FIs provide fast, reliable, and secure web and mobile sites and apps.

Let's all hope for another good year!

3 Comments

Thanks for the sharing of such information.This is a great stuff of reading.

Nice prediction about banking & financial services in 2014.All we can do is to provide fast, reliable service to our customers....

This is good news! It's great to know that banking is back in the business. Thank you for sharing!

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