NAJAF, Khakan, MOSTAFIZ, Md Imtiaz and NAJAF, Rabia (2021). Fintech firms and banks sustainability: Why cybersecurity risk matters? International Journal of Financial Engineering, 8 (2), p. 2150019.
Abstract
In the new and evolving digitalized world, the cybersecurity threats have placed the assets and information of corporations, institutions, governments, and individuals at constant risk. Banks are not an exception. Offering the low-interest rate is becoming the fundamental strategic move of the banks to sustain. Due to the high demand for a tailored portfolio of financial products, the availability of sophisticated communication and advance transaction mechanisms lead to an emergence of a new type of competitor known as financial technology service (i.e., fintech). The collaboration between these fintech organizations and banks has recently increased to provide fine-tuned service to the consumer and satisfy emerging market needs. However, this collaboration between banks and fintech firms has triggered significant cybersecurity risk. Hence, the dilemma is whether the bank should embrace such collaboration to resuscitate the profit margin or be pragmatic, and shirk to eliminate sustainability risk? We argue that the alliance between bank and fintech firms triggers a high-level of cybersecurity risk. We propose a theoretical model and discuss various types of cybersecurity risks. The benefit (or cost-if any) of having alliance could be enormous in yielding profitability and increase sustainability if both fintech and banks collaboratively abate the cybersecurity risks.
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