Commonwealth Bank (ASX: CBA) chief Ian Narev ranks a cyber attack as one of his biggest fears, as banks increasingly move online.
"The security of our perimeter and our ability to understand what sorts of things people might try to do, what sorts of ways they could put our relationship with customers in jeopardy is something we worry about all the time," Mr Narev said. He added that he put cyber attacks on his list of top two or three concerns.
News reports suggest that Australian companies have been targeted in the past, with hackers attempting to steal sensitive intellectual property such as BlueScope Steel's (ASX: BSL) colorbond process.
Mr Narev also said the big four banks face a growing threat from new competitors such as internet giants Google, Ebay and Apple, who are moving to provide financial services to customers. In a warning to regulators, Mr Narev said policymakers need to ensure that new entrants into the financial services sector faced the same strict regulations as the traditional players.
The big four banks also face increasing competition from smaller players such as Yellow Brick Road (ASX: YBR), which has teamed up with Macquarie Group (ASX: MQG) to offer cheap home loans. Yellow Brick Road has also announced that the company is hoping to capture a slice of the $1.5 trillion superannuation market, with the launch of a low-fee super fund. The major banks control a large portion of the superannuation industry, through their funds and wealth management arms.
With banks dealing in money as their 'product', infiltration by hackers into their systems could have disastrous results for the banks and their customers, and I can see why they rank cyber attacks as a major threat to their business.
Foolish takeaway
It's not just the banks that are under threat from cyber-crime. Every company with sensitive information stored on computers is potentially at risk, government departments are also at risk.
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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned.
