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The week in fintech: Consortium aims to bolster cybersecurity standards

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The week in fintech: Consortium aims to bolster cybersecurity standards

This recap features updates on bank technology, payments, online lending and other news in the U.S. financial technology space. Send tips, ideas and chatter to rachel.stone@spglobal.com. For other recent fintech news, click here.

Following the World Economic Forum declaring cybersecurity as the number one risk to the financial services industry, a number of companies have gotten together to address the issue.

The consortium, which was formed in response to recommendations in a recent World Economic Forum report, includes Kabbage Inc., Citigroup Inc., Zurich Insurance Group AG, Hewlett Packard Enterprise Co. and Depository Trust & Clearing Corp. Rob Morgan, vice president of payments and cybersecurity policy at the American Bankers Association, said it is "certainly a challenge" for banks to educate fintech startups about the regulatory and security expectations in the banking environment.

"As we see these partnerships develop, there's a big role to play in getting the fintechs to learn to speak bank," Morgan said in an interview. "But there's also a bit of learning the other way, where the banks need to learn to speak startup ... and be able to be nimble."

Morgan highlighted the growing tendency toward collaboration between fintech companies and established financial institutions as the two sides move beyond the previously held notion that they were always in direct competition with one another. When banks enter into these partnerships, they need to ensure the fintechs are up to the same security standards as they are, he said.

Cyber breaches have almost doubled since 2013, and the estimated cost of cybercrime over the next five years is likely to total $8 trillion, Zurich Insurance Group CEO Mario Greco said.

The consortium will be able to provide information to help give fintech companies a clear understanding of the steps they need to take to reach bank-level standards, Morgan said. Its first objective will be to determine a set of criteria that would allow fintech companies to evaluate their cybersecurity defenses.

But no matter what kind of recommendations the consortium puts forth, Morgan said banks will still need to do their own assessment of every potential vendor.

Also this week, the SEC charged a former Equifax Inc. chief information officer with insider trading. Wall Street's top regulator alleged that Jun Ying knew about the company's massive data breach, exercised all of his vested company stock options and sold the shares for nearly $1 million before the breach was made public, avoiding more than $117,000 in losses.

Amazon.com Inc. launched its first debit card this week. The card, backed by Mastercard Inc., was rolled out in Mexico in a bid to encourage customers without bank accounts to shop on its e-commerce platform.

Elsewhere in the financial technology world, On Deck Capital Inc. appointed Kenneth Brause as its new CFO, effective March 26.

Marsh LLC joined the Enterprise Ethereum Alliance, the world's largest open source blockchain initiative with more than 400 member companies, which aims to create open industry standards for blockchain applications on the core Ethereum platform.

In cryptocurrency news, Coinbase Inc. obtained an electronic money license from the U.K. Financial Conduct Authority; its British subsidiary reportedly secured a banking account with Barclays Plc.

Beginning in June, Alphabet Inc.'s Google and YouTube will ban advertisements for cryptocurrencies and other "speculative" financial products.

Square Inc. could apply for a BitLicense in New York, Credit Suisse analyst Paul Condra said in a March 16 note. The company recently tweeted that it was working on expanding bitcoin buying and selling through the Square Cash app to New York residents.

Ripple CEO Brad Garlinghouse told TechCrunch that it plans to start investing in crypto startups that provide alternative uses for its digital currency, XRP.

From March 9 to March 15, the SNL U.S. Financial Technology Index fell 0.92%.

A recent report from S&P Global Market Intelligence explores how banks and insurers are embracing fintech innovation. The report looks at recent trends and provides outlooks for the insurtech, digital lending, digital investment management, digital banking, payments and distributed ledger technology sectors. Click here to read the report.