UK and US bankers place fears about cybercrime at the top of a list of 24 possible risks to the financial services industry, beating off traditional worries about excessive regulation and economic growth.
The threat posed by cybercriminals is top of mind for the UK financial sector in a survey of 113 UK bankers, observers and risk regulators conducted by PwC as part of the CSFI's annual "Banking Banana Skins" study.
One UK respondent said: “We may at some point see a cyber attack so powerful on an individual bank that it has the power to bring down the institution, necessitating a state bailout.”
Globally, cybercrime has surged as a concern from the number nine position in the Banana Skins chart last year to number two this year, displacing regulatory issues in the poll. At the global level, it was beaten to the top spot only by worries over the fragility of the global economy.
The UK results resemble those of North America where the US banks and the Canadians are more concerned with criminality than with the macro-economic outlook, possibly because of stronger economic growth. Generally, the UK responses produce a picture in which many of the crisis-related risks around credit, liquidity, and capital, and the public sector aftermath from political interference and excessive regulation are beginning to ease.
But these are being replaced by a set of institutional risks, notably ageing technology, reputational risk, poor business conduct practices and weak internal governance and risk management systems.
“Although much work has been done by banks and their regulators to strengthen risk controls, banks still have more to do to address the scale of risk and its ever-changing nature," says Simon Hunt, UK head of banking and capital markets at PwC “The survey shows a fairly strong global consensus that the main threats to banking safety come from areas such as criminality, which has shot up the rankings dramatically, technology risk, and conduct practices.