Competition remains fierce and interest remains remain low, so small banks are turning to new, innovative products and services in efforts to increase profits. Banks and other businesses have faced an enormous disruption from cyber attacks from various groups that are attempting to steal data or make political statements.
A bank in Portsmouth, Va., has found a way to address each concern with one solution. The $4.4 billion asset company, TowneBank, bought a minority stake in Sera-Brynn, which is a cyber security firm in Sera-Brynn. TowneBank now plans to offer information security and compliance services to commercial customers. Businesses can “provide significant deterrents to force criminals to move on to someone else that isn’t well protected,” said TowneBank President and Chief Banking Officer J. Morgan Davis.
TowneBank began looking into providing cyber security services last year after one of its merchants experienced fraud. During the process, client payment information became exposed and the bank recognized it had potential liability as well, according to Davis. With agreements with credit card companies, banks can be held responsible if merchants fail to take proper security measures, he added.
As more work is being done on the mobile devices of employees, hacking is becoming easier. Some mobile devices may lack necessary security measures, said a senior security worker. People using mobile devices may unknowingly pick up malware on their tablets or smartphones and then banking data or customer’s data can be exposed through the infection. Instances of mobile malware rose 614 percent from the same time a year earlier, according to Juniper Networks. There are 5.6 million potentially malicious files for Androids alone, with 1.3 million of those confirmed as malware, according to the mobile working group division of the Anti-Phishing Working Group.
Proving security services is a way that TowneBank can address concerns and deepen relationships with customers. The bank has already obtained experience running different business lines that include an insurance agency and a realty firm. Roughly about 30 percent of the bank’s profit is the result of non-interest income, according to Davis.
In the second quarter, non-interest income rose more than 5 percent from the same time period just a year earlier, which averaged $12.1 million, which was based on American Banker analysis of 380 banks that had $40 billion or less in assets. However, as with any business, there are pitfalls that any bank entering cyber security should consider, according to experts, including making sure the bank has the right expertise on staff to provide great service for the particular product.
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