Frost & Sullivan views Australia’s development as a leader in Fintech innovation will require concerted effort from government agencies and established financial institutions and will involve partnerships and research collaboration between banks and startups, presenting many diverse and lucrative growth and development opportunities for ICT companies that will help form the necessary ecosystem for a leading fintech market.
The report indicated that data and connection security will be the most significant challenge for Australian fintech, largely because mobile payments make up the majority of fintech revenue. Asa result, reliable security becomes an integral issue and an important selling point to ensure success, consumer trust and growth needed compete with established institutions. Frost & Sullivan recommends that Australian fintech partner and collaborate with security vendors and ICT companies to improve the security and connectivity of increasingly mobile-centric financial services and to protect a user’s financial data.
The study, “Fintech in Australia – Trends, Forecasts and Analysis 2015- 2020,” indicates that Australian fintech success depends on security vendors: many ICT and telecommunications opportunities will be security-focused. As an example, APAC revenues for cyber security in the banking and finance security technology market are expected to grow at a CAGR of 7.31% over the forecast period of 2015-2020.
“Established institutions already have large security expenditures, with security systems and protocols built over many years. Attacks against these institutions are highly unlikely and more unlikely to be successful. However, the sensitivity of financial data, unlike any other kind of personal data, will mean security will be a concern at every other stage of a product’s delivery chain,” observed Saranga Sudarshan, Research Analyst, ICT Practice, Frost & Sullivan Australia & New Zealand. “End-user attacks are the highest priority given that the decentralisation of personal smart devices, whether they are wearables, smartphones or personal computers, will make storage of end-user credentials the most vulnerable to security attacks. Uniform security protocols will not be implemented without significant standardisation of operating systems and version updates.”
According to the report, biometric security — the protection of an individual’s financial data and reduces vulnerability to cyber fraud or physical fraud as well as weak or misplaced passwords — will be paramount to the future of mobile security, and fintech are believed to be able to drive such an expansion of biometric security. Frost & Sullivan anticipates that biometric authentication will be the future of mobile security, with extensive biometric security features developed or announced for implementation in all new smartphones over the next 18 months. Blockchain development for financial services has attracted various ICT companies to develop blockchains with different revenue models; the report indicated that some companies have opted for a blockchain-as-a-service model, while others have opted to sell cryptocurrencies.
“ICT companies involved in blockchain development include Ripple Labs with their direct partnerships with international banks, and their Interledger project; Microsoft and Ethereum with their EthBaaS, or Blockchain-as-a-Service product; IBM working with Digital Asset Holdings, to develop Business Logic Engines to embed blockchain technology into a business’s exiting transaction systems and Intel is developing blockchain technology with internal trials for the benefit of the Hyperledger Project,” contended Audrey William, Head of Research, ICT Practice, Frost & Sullivan Australia & New Zealand. “The cloud computing capability of Watson Analytics presents a possible model for other AI platforms aimed at the financial services sector. AI hardware architecture is the foundation for customised AI software, and Facebook’s Big Sur is an example of an AI hardware architecture that allows Fintechs and established financial institutions to build their own AI systems. Customised AI systems would allow a range of AI solutions to compete in a market of “off-the-shelf” AI Analytic packages.”
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