Tech and social media risks top of mind for NZ bankers
(9 December 2015 – New Zealand) Risks related to technology is the biggest concerns to the New Zealand bank industry according to consulting firm, PriceWaterhouseCoopers (PWC).
The firms’ research report “Banking Banana Skins 2015: Recovery under threat – New Zealand edition” has found that New Zealand banks have the lowest levels of overall anxiety and the highest levels of preparedness than any other country surveyed.
PwC’s Banking and Capital Markets Leader Sam Shuttleworth said: “This optimistic outlook is in part down to the Kiwi ‘can do’ psyche, coupled with the lower levels in complexity of New Zealand’s banking products and continued focus on regulation and risk management.”
The biggest fears for New Zealand banks include technology risks, social media, macro-economic environments, conduct practices and pricing of risk.
“It’s not surprising that for New Zealand banks these technology-related risks have risen to the top, with social media’s power to damage reputations with or without sound evidence coupled with jumps both locally and globally, in the risk of criminality,” Shuttleworth says.
“As the industry increasingly embraces technology and moves towards greater digitisation, focus on how to better manage these risks has resulted from concerns about the vulnerability of out-dated systems to cyber-crime and outages.”
Interestingly, social media has risen from 7th place to second in Australia and New Zealand, compared to its position as 11th biggest risk on a global scale.
Rounding out the “Top 5” risks are factors such as macro-economic environment, conduct practices and pricing of risk.
A New Zealand-specific concern which was much commented on by respondents was the risk of the build-up of a housing bubble fuelled by quantitative easing and was one of the reasons why the pricing of risk remained as a top-five threat, down three places from 2014.
Shuttleworth says the lowest scored risks in New Zealand relative to the global averages were related to governance, while several respondents noted marked improvements in boardrooms. Regulation risk was also seen as considerably lower than in many other jurisdictions.
“Despite much work by banks and regulators to strengthen risk controls, there is still more to be done to address the scale of risk and its ever changing nature,” Shuttleworth says.
“Banks are recognising they cannot only be concerned with their own systems and processes but also with related reputational risks arising from third party outsourcing and off-shoring activities.
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