Weekly Briefing No. 174 | The State of Healthtech Cybersecurity, Financial Advisors Must Innovate, and More

todd-quackenbush-27493-unsplash.jpg

Welcome to The FR. We’re a healthy place to be.

In this edition:

  • Beefing Up Healthtech Cybersecurity

  • Payments Start-Ups Target Small Businesses

  • Financial Advisors Must “Innovate or Else”

  • California’s New Data Privacy Law

  • Who in Tech Wants to Work for a Bank?

We're looking for rockstars to take part in the revolution. Want to join our growing team? Send us your resume.

Beefing Up Healthtech Cybersecurity

In today’s always-on digital world, cybersecurity is a chief concern for most industries. With the rise of so many internet-connected devices, there are exponentially more attack vectors through which hackers can target organizations than ever before. We have seen this most notably in the financial services industry, where firms are 300 times more likely to be attacked than those in other industries.

And a chief concern in all of this is the relationship between firms and third-party vendors who supply technology. If a cyber attack is made through a system provided by a vendor partner, who is ultimately responsible?

It seems the healthcare industry is grappling with these same issues. After decades of being entirely paper-based, the healthcare sector in recent times has embraced digital records and interconnected medical devices — which in turn has seen the industry grow as a target of cyberattacks, according to Moody’s.

This has led healthcare organizations to request information about the software that is running these devices that third-party manufacturers have long considered proprietary. The requests have generated tensions between the sides, the WSJ reports.  As we see internet-connected devices become more a part of healthcare, this issue will likely continue.

Payments Start-Ups Target Small Businesses

It’s long been known that small businesses, feeling often overlooked by their banks, have increasingly turned to fintechs for a variety of services. Now fintechs are looking at FX trading as another avenue by which to attract small businesses. Reuters reports that Revolut and TransferWise have signed up thousands of new small business customers, with the promise of a slicker, digital interface and better rates for making FX trades.

“Small businesses don’t get any better prices than consumers,” Stuart Gregory, head of TransferWise for Business, is quoted as saying. That goes to the heart of the frustration many small businesses have with financial institutions — that they are treated, more or less, like a general consumer, as opposed to the services mid-to-large size business clients receive.

“Fintechs that focus directly on FX services in the B2B cross-border payments space are uniquely positioned to cater to the business needs of today’s small business,” adds Iain McNicoll, VP, Regional Head – Americas, SMB at  Payoneer. “Legacy banks are hamstrung by their complex matrix organization, which can deprioritize small businesses; in contrast, fintech brokers have an in-depth understanding of modern small business models, which results in a more intuitive payments platform, better service, and lower rates for customers.”

Whether start-ups can continue to take a significant bite out of the $7-trillion-a-year FX market will be interesting to track.  

Financial Advisors Must “Innovate or Else”

That was the sentiment from a recent roundtable of advisors hosted by InvestmentNews. Unlike other sectors of financial services — such as retail banking, payments, and insurance — the financial advisory space has been hit less with tech disruption. Sure, robo-advisors have become wildly popular, but generally they are used for small-dollar accounts.

The generally accepted notion is that for high-net-worth clients or “advanced” investing, it is still relationship-based, and you meet with an advisor face-to-face, like always. However, several of those on the roundtable said the industry needs to be better at adopting innovative tech, such as automating routine tasks. As one panelist put it, “If there are 17,000 wealth managers in this industry, I would say 16,500-plus are not necessarily that innovative.”

California’s New Data Privacy Law

One of the enduring memories of the Obamacare rollout in 2013 was the extreme tech issues with its website, Healthcare.gov. California officials hope a similar fate doesn’t derail its ambitious new data privacy law, set to go into effect at the beginning of next year. The California Consumer Privacy Act is somewhat modeled on the EU’s much-ballyhooed GDPR law, which aimed to give consumers the right to control how their data is used by private companies.

The California law also aims to give citizens the ability to request data be deleted and prevent its sale. But with 40 million residents in the state, California’s attorney general — who is tasked with enforcing the law — is hoping his office doesn’t strain too much under the pressure, telling CNBC he is “worried” he doesn’t have enough staff to deal effectively with the rollout. If similar snafus akin to the Affordable Care Act happen here, it will be interesting to see how that affects the law’s popularity and usage.

Who In Tech Wants to Work for a Bank?

There are myriad reasons given as to why the banking industry lags behind in tech innovation and can’t seem to hire top tech workers. Some say it’s because they lack a “start-up culture.”  Regulatory constraints are also frequently cited, as well as the general risk-averse nature of banks.

Another of the most frequently cited concerns is that banks simply can’t attract the level of tech talent that other industries can. The common thinking goes that millennial tech workers want to work for fast-moving, hip start-ups, get in early, make fast money, and get out. Or perhaps work for a tech giant where they can work on new and challenging projects. Banking is currently seen as a slow, stodgy field with comparatively low pay.

However, some banks are turning to new methods to lure tech pros to come work for them. These include pouring money into application development teams, offering more opportunities to work with burgeoning tech like AI, and building urban campuses featuring “open floor plans and collaborative workspaces.”

Banks will always face an uphill battle trying to recruit tech workers away from Silicon Valley, but any little measures they can take in the meantime will only help.

Quote of the Week

“Human behavior flows from three main sources: desire, emotion, and knowledge.”

—Plato