Cyber threats now a daily reality for one in three businesses

Businesses are losing out on an average of $98.5 million a year as a consequence of cyber threats, fraud, regulatory hurdles and operational inefficiencies, according to research from FIS and Oxford Economics. The cost of disharmony is highest among technology companies, followed by insurance, financial services and fintech respondents.

The study revealed nine sources of disharmony, defined as disruptions and inefficiencies across the money lifecycle, with the most significant ones including:

• 88% of respondents identified cyberthreats
• 79% identified fraud
• 65% identified regulatory complexities

Other tensions identified were operational inefficiencies, payment friction, human errors, illiquidity, financial technology skills gaps, and reputational damage.

37% of respondents said their company experiences cyber threats daily, and 74% face critical or high-profile threats on a monthly basis. 83% said their firm prioritizes fraud risk management. Yet, 53% said they are unhappy with their fraud response plans.

41% reported being dissatisfied with their basic software tools for fraud detection and prevention methods. 47% of those surveyed said their company does not regularly train employees on fraud and cyber awareness, leaving these firms more vulnerable.

Insurance firms buck the trend

75% of insurance companies rely on employee training for fraud prevention, compared to an average of 48% across all sectors surveyed.

The survey results also shined a light on the specific financial technologies that forward-looking organizations are employing to address disharmony in their operations. 82% of surveyed leaders said they have implemented embedded finance solutions, realizing an average 8.5% growth in sales through these investments.

Moving funds seamlessly from point A to B is a critical function of nearly every business. Yet, the survey highlighted key points of friction within respondents’ payments systems and processes. 51% said their business faces greater tension when money is in motion, including when moving money through payments systems, credit and debit accounts, and card networks, than during other phases of the money lifecycle.

While 79% said their business has adopted automated payment processing technology, 57% reported experiencing transaction delays at least once a month.

Fintech strategy is key to growth

85% of leaders surveyed from organizations with dedicated fintech teams reported feeling moderately or very well-equipped to address frictions including inefficiencies, cyber risks, and compliance failures.

Respondents from firms with dedicated fintech teams reported higher sales growth than those without, with 83% of these companies seeing revenue increases after embedding fintech solutions.

In contrast, the research identified the insurance industry as lagging in fintech adoption, with only 52% of leaders surveyed from investment companies reporting that they have a fintech team, compared to 74% of respondents across all industries surveyed.

Companies are investing in GenAI and ML

A notable trend among the executives and business leaders was the investments their organizations are making in AI and automation technologies. 55% reported that their companies are investing in innovative solutions such as GenAI and ML to meet their strategic objectives.

However, 73% cited the high cost of implementation and maintenance as an obstacle to their firm’s adoption of AI and automation, as well as struggling with a lack of in-house expertise (64%) and the difficulty of integration with existing systems (58%).

Showing signs of optimism despite these obstacles, 56% said their companies plan to employ AI to increase their organization’s agility in response to market dynamics, while 48% anticipated it would enable them to gain new customers.

“The findings highlight that a well-defined technology strategy, supported by a dedicated and knowledgeable team, is a fundamental component of a firm’s success. Companies that invest in building or partnering with fintech expertise are better positioned to optimize their financial operations, mitigate risks and ultimately achieve the financial harmony that drives sustainable growth,” said Firdaus Bhathena, CTO of FIS.