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Cybersecurity concerns will increase in the UK wealth industry
In the UK, clients of wealth managers are less apprehensive about data breaches than the majority of their global counterparts. However, examples of data breaches closer to home will influence consumer awareness around the topic and increase concerns, says GlobalData Financial Services.
GlobalData’s 2018 survey of wealth managers found that globally 60% of providers believe that cyber-attacks are increasingly worrying their clients. However, this is a different story in the UK, where only 31% of providers agree that clients are increasingly concerned about data breaches and cybercrime.
This somewhat nonchalant level of concern among clients mirrors the view of the firms themselves. GlobalData’s research shows that over a fifth of UK wealth managers are not at all concerned about the aftermath of data breaches to their reputations. On a global level, the proportion of those who are not worried stands at only 8%.
The lack of alarm can be explained by the fact that the UK wealth management industry has not seen data breaches related to cybercrime. The Panama and Paradise Paper leaks were of a different nature, and in fact the offshore wealth industry has been doing well regardless: HNW offshore holdings have risen since the 2016 leak.
Nonetheless, it is GlobalData’s view that the current low levels of client concern will not persist. The TSB debacle in April 2018, when customers were able to view others’ financial information when using online banking, is the most recent and relevant data breach in the wider banking industry that will contribute to raised consumer awareness. Outside of financial services, Facebook and British Airways both experienced security breaches in 2018. Such high-profile cases will undoubtedly heighten consumer sensitivity about their data.
As even these outside factors can influence consumer concerns, UK wealth managers should not underestimate the risks related to cybercrime and data breaches – not only because of the risk of reputational damage, but also the hefty fines introduced by the GDPR. Reassuring clients that companies have relevant security measures (and contingency plans) in place is critical.