The “biggest single risk” to security in the banking sector is cyber risk, according to Westpac’s CEO.
Following his trip to Davos to attend the World Economic Forum, the CEO of Westpac, Brian Hartzer, noted that the “consistent view” of his global banking counterparts was that cyber risks were the greatest threats to security in the industry.
“The biggest single risk is cyber risk, and actually, that’s the thing we need to focus on,” Mr Hartzer said.
“We do a lot within our own companies to protect ourselves against cyber risks. At Westpac, we’re spending tens of millions of dollars every year; we’re constantly testing and improving our defence and ability to recover if something happens.”
Mr Hartzer added that Westpac will look to cooperate with “peer banks, the financial services industry and governments” to tackle what he believes is a global threat.
“[The] nature of cyber is we’re a connected world and what happens in one place can affect others,” the CEO said. “And the insight was that businesses and government need to work together to anticipate how an issue in one part of the network can affect other parts of the network and its ability to recover.”
Cyber security has been of increasing importance to the banking sector as the industry increasingly relies on cloud computing and online banking, and has been shaken by attacks such as that experienced by US-based company Equifax Inc, which announced last year that it had been subject to a cyber security incident that could have impacted up to 143 million consumers.
Role of technology in the industry’s future
The Westpac CEO urged the industry to “step up” and “embrace” technological change, noting that change was needed despite the fact that “lots of jobs will be affected by technology”.
“Businesses are recognising, as we do at Westpac, that we have a role to play in this,” the CEO continued.
“There’s no point pretending that technology isn’t going to affect jobs, or skills or capabilities within jobs, but it can be a net positive for the economy if we embrace it.
“That doesn’t mean that people aren’t going to be affected. The question is how quickly can we re-skill people, can we grow new jobs off the back of what technology can do so people can find new jobs… this is a really important time for business to step up.”
Mr Hartzer echoed the sentiments of ANZ CEO Shayne Elliot, who also called for the industry to acknowledge the role of “barrier-breaking technology” at the bank’s annual general meeting.
“Digitisation, mobility, cloud computing and increasingly artificial intelligence, machine learning and robotics are transforming industry after industry — breaking down barriers, creating new forms of competition, providing nimble players with new opportunities while imposing fundamental challenges to the incumbents,” Mr Elliot said.
Artificial intelligence (AI)
Moreover, Mr Hartzer specifically noted the role of “artificial intelligence” (AI) in transforming the industry, claiming that it’s “beginning to ripple through lots of industries”.
The CEO made reference to the insurance industry’s use of AI technology to develop its pricing methods.
Indeed, speaking at The Adviser’s US Study Tour 2017 in November, Jonathan Miranda, director of strategy, technology at Salesforce, claimed that AI is going to have a “huge impact on business” and will “disrupt everything before it and fundamentally change it, because it [is] going to make it that much more powerful”.
However, Mr Miranda said that he doesn’t believe that the adoption of AI technology will have an impact on jobs any time soon.
He said: “[AI] is not going to take our jobs immediately; the reality is that anything that is human-level AI or a general AI is decades away.”