A consortium focused on improving cybersecurity of fintech companies has been created by the World Economic Forum.
The formation of the group comes as collaboration between fintechs and financial institutions grows, according to Reuters.
The consortium’s founding members include Citigroup, online lender Kabbage, the Depository Trust & Clearing Corporation, Zurich Insurance Group, and Hewlett Packard Enterprise, the companies said on Tuesday.
According to the report, the group will aim to create a framework to assess the security level of fintech companies and data aggregators, whose preparedness against hacks is seen as increasingly important to the stability of the wider financial industry.
The financial services sector is among the most vulnerable to cybercrime because of the vast amount of financial and valuable data that banks and investment firms generate and process each day.
Collaboration between banks or finance firms and young start-up organisations has grown over the last few years, aiming to give the financial services a face lift to how they are consumed and developed. The growth has been encouraged due to new regulations such as the EU’s revised Payment Service Directive as well as volunteering to join forces to better competitiveness.
This has heightened the need for fintech companies to implement sturdy cybersecurity measures, said Matthew Blake, head of the Financial and Monetary System Initiative at the WEF.
“Many partnerships are forming between financial technology companies and incumbent institutions,” Blake said in an interview. “Through those linkages there is a potential introduction of risk.”
The need for better cybersecurity assessment mechanisms was identified in a WEF report published on Tuesday as one of the solutions to the security challenges posed by the increased use of digital services in finance.
The report noted that the use of technology innovations such as robotics and biometrics was expanding the amount of customer data at risk.
The new consortium, which will be managed by the WEF and work with the organisation’s new Geneva-based Global Center of Cybersecurity, will develop a point-based scoring system for fintech firms.