FinTech & the Quest for Minimum False Alarms
The financial world is coming of age against the background of the changes cybersecurity has introduced. In a special interview, ThetaRay CEO Mark Gazit outlines the changes required of companies in the FinTech world
Ami Rojkes Dombe
| 14/06/2019
Illustration: Bigstock
FinTech (Financial Technology), the revolution destined to break the traditional structure of the financial world, has come of age. Apparently, investors, as well as clients wishing to advance solutions in this field, are no longer impressed by "cool" applications. They want the entrepreneurs to present working concepts. While in the past foundations and investors placed their money on products which offered a "young color," like selling advertising in different ways or leverages based on virtual currency, today investors seek low-cost solutions that work and can ensure them of a high yield.
"Cybersecurity has become an essential element in FinTech as it is possible to steal money," explains Mark Gazit, CEO of ThetaRay, "and that is a hurdle for the FinTech world and the financial world generally. The financial world is going online. There are elements that provide an alternative to the credit card companies and the banks for payment through the Internet. The risk is a part of the game and that is one of the reasons why the default today is online banking. The banks have not lost the customers' trust or their confidence in banking. The market has come of age. Investors seek companies that offer products between the virtual world and the physical world, and new tangential domains like artificial intelligence and insurance sound interesting."
According to Gazit, investors in FinTech have realized that it is no longer possible to attract users to online banking services without providing them with effective security. The implication is that awareness of the need for cybersecurity solutions for the FinTech world has improved in the last year. "The world of threats has undergone a revolution. There are hardly any people who would actually break into a bank. The current trend is a combination between cyber and stealing money," explains Gazit. "A software product may be used to steal a few cents from multiple accounts. This threat can execute hundreds of millions of transactions per month 'under the radar.' An attack group implementing such a model can come out of it with dozens of millions of dollars per month.
"In the last few years, money has been stolen through the SWIFT system (the internal communication system of the banking world) as well. The Automatic Teller Machine (ATM) has also become an IoT product connected to the web and an objective that needs to be secured. Hackers discovered that ATMs can be hacked. In one of the incidents being investigated in connection with money stolen from ATMs, it was established that the hackers had not stolen more than five banknotes from each ATM, and never hit the same ATM twice."
Money Laundering more than Stealing
One of the hottest trends in banking, according to Gazit, is the prevention of money laundering. "The banks are not concerned about the stealing of money. Even if someone stole millions from them, it will not bring them down. But if that money is used for laundering purposes, it can bring them down. If the bank helped to launder money, this will personally affect the bank functionaries," says Gazit. "In line with these concerns, banks must change the reliance of their cybersecurity systems on rules. Rules become accessible to hackers who manage to figure out most of them.
"In order to deal with the new attacks, the banks are switching to the use of artificial intelligence systems to identify unfamiliar phenomena. The problem with these systems is the excessive number of false alarms. If a product imposes an operational overload on a financial organization, that organization will not use it. Consequently, investors currently seek systems that generate the smallest possible number of false alarms. Systems of the present generation are designed to look for connections between random points, to find a logical context within the randomality."
The financial world is coming of age against the background of the changes cybersecurity has introduced. In a special interview, ThetaRay CEO Mark Gazit outlines the changes required of companies in the FinTech world
Illustration: Bigstock
FinTech (Financial Technology), the revolution destined to break the traditional structure of the financial world, has come of age. Apparently, investors, as well as clients wishing to advance solutions in this field, are no longer impressed by "cool" applications. They want the entrepreneurs to present working concepts. While in the past foundations and investors placed their money on products which offered a "young color," like selling advertising in different ways or leverages based on virtual currency, today investors seek low-cost solutions that work and can ensure them of a high yield.
"Cybersecurity has become an essential element in FinTech as it is possible to steal money," explains Mark Gazit, CEO of ThetaRay, "and that is a hurdle for the FinTech world and the financial world generally. The financial world is going online. There are elements that provide an alternative to the credit card companies and the banks for payment through the Internet. The risk is a part of the game and that is one of the reasons why the default today is online banking. The banks have not lost the customers' trust or their confidence in banking. The market has come of age. Investors seek companies that offer products between the virtual world and the physical world, and new tangential domains like artificial intelligence and insurance sound interesting."
According to Gazit, investors in FinTech have realized that it is no longer possible to attract users to online banking services without providing them with effective security. The implication is that awareness of the need for cybersecurity solutions for the FinTech world has improved in the last year. "The world of threats has undergone a revolution. There are hardly any people who would actually break into a bank. The current trend is a combination between cyber and stealing money," explains Gazit. "A software product may be used to steal a few cents from multiple accounts. This threat can execute hundreds of millions of transactions per month 'under the radar.' An attack group implementing such a model can come out of it with dozens of millions of dollars per month.
"In the last few years, money has been stolen through the SWIFT system (the internal communication system of the banking world) as well. The Automatic Teller Machine (ATM) has also become an IoT product connected to the web and an objective that needs to be secured. Hackers discovered that ATMs can be hacked. In one of the incidents being investigated in connection with money stolen from ATMs, it was established that the hackers had not stolen more than five banknotes from each ATM, and never hit the same ATM twice."
Money Laundering more than Stealing
One of the hottest trends in banking, according to Gazit, is the prevention of money laundering. "The banks are not concerned about the stealing of money. Even if someone stole millions from them, it will not bring them down. But if that money is used for laundering purposes, it can bring them down. If the bank helped to launder money, this will personally affect the bank functionaries," says Gazit. "In line with these concerns, banks must change the reliance of their cybersecurity systems on rules. Rules become accessible to hackers who manage to figure out most of them.
"In order to deal with the new attacks, the banks are switching to the use of artificial intelligence systems to identify unfamiliar phenomena. The problem with these systems is the excessive number of false alarms. If a product imposes an operational overload on a financial organization, that organization will not use it. Consequently, investors currently seek systems that generate the smallest possible number of false alarms. Systems of the present generation are designed to look for connections between random points, to find a logical context within the randomality."
